UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO
SECTION
13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report:
February
5, 2013
(Date
of earliest event reported)
Glu Mobile Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or Other Jurisdiction of Incorporation)
001-33368 |
91-2143667 |
(Commission File Number) |
(IRS Employer Identification No.) |
45 Fremont Street, Suite 2800 |
|
San Francisco, California |
94105 |
(Address of Principal Executive Offices) | (Zip Code) |
(415) 800-6100
(Registrant’s Telephone Number, Including Area
Code)
Not Applicable
(Former name or former address, if
changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 5, 2013, Glu Mobile Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2012. A copy of the press release is attached as Exhibit 99.01 to this Current Report on Form 8-K. In addition, on February 5, 2013, the Company made available on its corporate website at www.glu.com/investors supplemental slides that were referenced during the Company’s earnings call to discuss its financial results for the fourth quarter and full year ended December 31, 2012. A copy of such supplemental slides is attached as Exhibit 99.02 to this Current Report on Form 8-K.
The information in this Item 2.02, including Exhibits 99.01 and 99.02 to this Current Report on Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the accompanying Exhibits 99.01 and 99.02 shall not be incorporated by reference into any registration statement or other document filed by the Company with the Securities and Exchange Commission, whether made before or after the date of this Current Report on Form 8-K, regardless of any general incorporation language in such filing (or any reference to this Current Report on Form 8-K generally), except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.01 | Press release issued by Glu Mobile Inc., dated February 5, 2013. |
99.02 | Supplemental slides made available by Glu Mobile Inc. on its corporate website on February 5, 2013. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Glu Mobile Inc. |
|||
Date: | February 5, 2013 | By: |
/s/ Eric R. Ludwig |
Name: |
Eric R. Ludwig |
||
Title: |
Executive Vice President and |
EXHIBIT INDEX
Number |
Description |
|
99.01 |
Press Release issued by Glu Mobile Inc., dated February 5, 2013. |
|
99.02 |
Supplemental slides made available by Glu Mobile Inc. on its corporate website on February 5, 2013. |
Exhibit 99.01
Glu Reports Fourth Quarter and Full Year 2012 Financial Results
SAN FRANCISCO--(BUSINESS WIRE)--February 5, 2013--Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and publisher of freemium games for smartphone and tablet devices, today announced financial results for its fourth quarter and full year ended December 31, 2012.
“The fourth quarter came in at the high end of expectations across our key metrics,” stated Niccolo de Masi, Chief Executive Officer of Glu. “Consistent with our guidance, smartphone revenue was flat compared to Q3 due to the decision to delay the global launch of approximately half of our Q4 2012 titles. We anticipate seeing momentum accelerate as new titles launch incorporating our new monetization systems.”
De Masi continued, “Looking forward, we believe Glu is strongly positioned to lead in a Social Gaming 2.0 landscape. We will continue to deliver engaging core gameplay, industry leading production values, and outstanding global reach. Our new product roadmap emphasizes deeper and more immersive gameplay designed to drive higher monetization and lifetime value. Every game we release in 2013 is designed to have the potential to outperform our best titles of years past.”
Fourth Quarter 2012 Financial Highlights:
Selected Fourth Quarter and Full Year 2012 Operating Highlights and Metrics:
Fourth Quarter and Recent Developments and Strategic Initiatives:
Fiscal 2012 Financial Highlights:
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.”
“We had a solid fourth quarter performance with non-GAAP smartphone revenue growing primarily due to the strength of two of our new sequels Contract Killer 2 and Eternity Warriors 2,” stated Eric R. Ludwig, Glu’s Chief Financial Officer. “While we expect first quarter results to be impacted by a combination of seasonality and further delays in title launches, we remain in position to benefit from increasing monetization trends as we implement our new strategy. Given our on-going commitment to control costs, we are confident in our ability to end 2013 with approximately $14 million in cash and without the need to raise additional capital or incur debt.”
Business Outlook as of February 5, 2013:
The following forward-looking statements reflect expectations as of February 5, 2013. 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; development delays on Glu's products; continued uncertainty in the global economic environment; competition in the industry; storefront featuring; smartphone storefronts, carriers and other distributors maintaining their networks and provisioning systems to enable consumer purchases; changes in foreign exchange rates; Glu's effective tax rate and other factors detailed in this release and in Glu's SEC filings.
First Quarter Expectations – Quarter Ending March 31, 2013:
2013 Expectations – Full Year Ending December 31, 2013:
Quarterly Conference Call
Glu will discuss its quarterly results via teleconference today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Please dial (877) 593-1988, or if outside the U.S., (678) 905-9423, with conference ID # 87391968 to access the conference call at least five minutes prior to the 1:30 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 4:30 p.m. Pacific Time, February 5, 2013, and 8:59 p.m. Pacific Time, February 12, 2013, by calling (855) 859-2056, or (404) 537-3406, with conference ID # 87391968.
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 non-GAAP revenues, non-GAAP smartphone revenues, non-GAAP operating expenses, non-GAAP gross margins, non-GAAP operating income/(loss), non-GAAP net loss and non-GAAP basic and diluted net loss per share. These non-GAAP financial measures exclude the following items from Glu's unaudited consolidated statements of operations:
In addition, Glu has included in this release “Adjusted EBITDA” figures which are used to evaluate Glu’s operating performance and is defined as non-GAAP operating income/(loss) excluding depreciation.
Glu may consider whether significant non-recurring 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.
Cautions Regarding Forward-Looking Statements
This news release contains forward-looking statements, including those regarding our "Business Outlook as of February 5, 2013" ("First Quarter Expectations – Quarter Ending March 31, 2013" and “2013 Expectations – Full Year Ending December 31, 2013”) and the statements that: we anticipate seeing momentum accelerate as new titles launch incorporating our new monetization systems; we believe Glu is strongly positioned to lead in a Social Gaming 2.0 landscape; we will continue to deliver engaging core gameplay, industry leading production values, and outstanding global reach; our new product roadmap is designed to drive higher monetization and lifetime value; every game we release in 2013 is designed to have the potential to outperform our best titles of years past; while we expect first quarter results to be impacted by a combination of seasonality and further delays in title launches, we remain in position to benefit from increasing monetization trends as we implement our new strategy; and that we are confident in our ability to end 2013 with approximately $14 million in cash and without the need to raise additional capital or incur debt. 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 risks identified under "Business Outlook as of February 5, 2013"; 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 freemium games for smartphones, tablets and next-generation platforms, 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; 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 freemium gaming, is smaller than anticipated; and other risks detailed under the caption "Risk Factors" in our Form 10-Q filed with the Securities and Exchange Commission on November 9, 2012 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.
2008 Equity Inducement Plan
In connection with the hiring of our new VP of 3rd Party Development, Glu has agreed that its Compensation Committee will award our new VP of 3rd Party Development a non-qualified stock option to purchase 150,000 shares of Glu's common stock pursuant to Glu's 2008 Equity Inducement Plan. Glu's historical policy with respect to new hire stock option grants is to award a newly hired employee his or her stock option on the second Tuesday of the month following his or her employment start date; accordingly, the grant date for our new VP of 3rd Party Development’s option grant will be February 12, 2013. The stock option will have a six-year term, vest on a four-year schedule (25% of the underlying shares will vest on the first anniversary of our new VP of 3rd Party Development’s hire date, and 2.083% of the underlying shares will vest monthly thereafter), and have an exercise price equal to the closing price of Glu's common stock on the NASDAQ Global Market on the February 12, 2013 grant date.
Glu's Compensation Committee adopted the 2008 Equity Inducement Plan, which is a non-stockholder approved plan, to facilitate the granting of stock options as an inducement to new employees to join Glu. NASDAQ Marketplace Rule 5635(c)(iv) requires a public announcement of equity awards made under this type of plan.
About Glu Mobile
Glu Mobile (NASDAQ:GLUU) is a leading global developer and publisher of freemium games for smartphone and tablet devices. Glu is focused on creating compelling original IP games such as BLOOD & GLORY, DEER HUNTER, FRONTLINE COMMANDO, GUN BROS, and SAMURAI VS. ZOMBIES DEFENSE on a wide range of platforms including iOS, Android™, Windows Phone, Google Chrome and MAC OS. Glu’s unique technology platform enables its titles to be accessible to a broad audience of consumers globally. Founded in 2001, Glu is headquartered in San Francisco with a major office outside Seattle, and international locations in Canada, China and Russia. Consumers can find high-quality entertainment wherever they see the ‘g’ character logo or at www.glu.com. For live updates, please follow Glu via Twitter at www.twitter.com/glumobile or become a Glu fan at www.facebook.com/glumobile.
BLOOD & GLORY, CONTRACT KILLER, CONTRACT KILLER ZOMBIES, DEATH DOME, DEER HUNTER, DRAGON SLAYER, FRONTLINE COMMANDO, GUN BROS, SAMURAI VS ZOMBIES DEFENSE, SMALL STREET, GLU, GLU MOBILE and the 'g' character logo are trademarks of Glu Mobile Inc.
In the financial tables below, Glu has provided a reconciliation of the most comparable GAAP financial measure to each of the historical non-GAAP financial measures used in this press release.
Glu Mobile Inc. Consolidated Balance Sheets (in thousands) (unaudited) |
|||||||||
December 31, 2012 |
December 31, 2011 |
||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 22,325 | $ | 32,212 | |||||
Accounts receivable, net | 11,881 | 11,821 | |||||||
Prepaid royalties | - | 483 | |||||||
Prepaid expenses and other current assets | 2,487 | 1,881 | |||||||
Total current assets | 36,693 | 46,397 | |||||||
Property and equipment, net | 5,026 | 3,934 | |||||||
Other long-term assets | 227 | 404 | |||||||
Intangible assets, net | 10,889 | 10,078 | |||||||
Goodwill | 19,440 | 21,991 | |||||||
Total assets | $ | 72,275 | $ | 82,804 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Accounts payable | $ | 7,785 | $ | 6,894 | |||||
Accrued liabilities | 2,410 | 939 | |||||||
Accrued compensation | 5,989 | 5,404 | |||||||
Accrued royalties | 2,781 | 3,865 | |||||||
Accrued restructuring | 4 | 887 | |||||||
Deferred revenues | 9,031 | 7,139 | |||||||
Total current liabilities | 28,000 | 25,128 | |||||||
Other long-term liabilities | 5,388 | 8,503 | |||||||
Total liabilities | 33,388 | 33,631 | |||||||
Common stock | 6 | 6 | |||||||
Additional paid-in capital | 271,016 | 260,744 | |||||||
Accumulated other comprehensive income | 167 | 266 | |||||||
Accumulated deficit | (232,302 | ) | (211,843 | ) | |||||
Stockholders' equity | 38,887 | 49,173 | |||||||
Total liabilities and stockholders' equity | $ | 72,275 | $ | 82,804 |
Glu Mobile Inc. Consolidated Statements of Operations (in thousands, except per share data) (unaudited) |
||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, 2012 |
December 31, 2011 |
December 31, 2012 |
December 31, 2011 |
|||||||||||||
Revenues | $ | 20,981 | $ | 15,174 | $ | 87,493 | $ | 66,185 | ||||||||
Cost of revenues: | ||||||||||||||||
Royalties and other cost of revenues | 2,052 | 2,576 | 8,940 | 12,920 | ||||||||||||
Amortization of intangible assets | 1,073 | 1,552 | 3,783 | 5,447 | ||||||||||||
Total cost of revenues | 3,125 | 4,128 | 12,723 | 18,367 | ||||||||||||
Gross profit | 17,856 | 11,046 | 74,770 | 47,818 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 13,566 | 12,660 | 54,275 | 39,073 | ||||||||||||
Sales and marketing | 6,272 | 3,930 | 20,893 | 14,607 | ||||||||||||
General and administrative | 3,356 | 3,814 | 14,744 | 14,002 | ||||||||||||
Amortization of intangible assets | 495 | 495 | 1,980 | 825 | ||||||||||||
Restructuring charge | 838 | (92 | ) | 1,371 | 545 | |||||||||||
Impairment of goodwill | - | - | 3,613 | - | ||||||||||||
Total operating expenses | 24,527 | 20,807 | 96,876 | 69,052 | ||||||||||||
Loss from operations | (6,671 | ) | (9,761 | ) | (22,106 | ) | (21,234 | ) | ||||||||
Interest and other income/(expense), net: | ||||||||||||||||
Interest income/(expense) | 4 | 10 | 21 | (29 | ) | |||||||||||
Other income/(expense), net | 260 | (116 | ) | (368 | ) | 776 | ||||||||||
Interest and other income/(expense), net | 264 | (106 | ) | (347 | ) | 747 | ||||||||||
Loss before income taxes | (6,407 | ) | (9,867 | ) | (22,453 | ) | (20,487 | ) | ||||||||
Income tax benefit/(provision) | (660 | ) | (152 | ) | 1,994 | (614 | ) | |||||||||
Net loss | $ | (7,067 | ) | $ | (10,019 | ) | $ | (20,459 | ) | $ | (21,101 | ) | ||||
Net loss per share - basic and diluted | $ | (0.11 | ) | $ | (0.16 | ) | $ | (0.32 | ) | $ | (0.37 | ) | ||||
Weighted average common shares outstanding - basic and diluted | 65,678 | 62,973 | 64,318 | 57,518 | ||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||
Research and development | $ | 1,223 | $ | 800 | $ | 3,491 | $ | 1,387 | ||||||||
Sales and marketing | 43 | 95 | 386 | 351 | ||||||||||||
General and administrative | 560 | 475 | 1,945 | 1,372 | ||||||||||||
Total stock-based compensation expense | $ | 1,826 | $ | 1,370 | $ | 5,822 | $ | 3,110 |
Glu Mobile Inc. GAAP to Non-GAAP Reconciliation (in thousands, except per share data) (unaudited) |
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For the Three Months Ended |
|||||||||||||||||||||||||||||||||
March 31, 2011 |
June 30, 2011 |
September 30, 2011 |
December 31, 2011 |
March 31, 2012 |
June 30, 2012 |
September 30, 2012 |
December 31, 2012 |
||||||||||||||||||||||||||
GAAP revenues | |||||||||||||||||||||||||||||||||
Featurephone | $ | 10,478 | $ | 8,253 | $ | 7,248 | $ | 5,112 | $ | 4,165 | $ | 3,710 | $ | 2,924 | $ | 2,336 | |||||||||||||||||
Smartphone | 5,948 | 9,427 | 9,657 | 10,062 | 17,379 | 19,911 | 18,423 | 18,645 | |||||||||||||||||||||||||
Total GAAP revenues | 16,426 | 17,680 | 16,905 | 15,174 | 21,544 | 23,621 | 21,347 | 20,981 | |||||||||||||||||||||||||
Change in deferred revenues and amortization of in-process development contracts | |||||||||||||||||||||||||||||||||
Featurephone change in deferred revenue | (63 | ) | (6 | ) | 5 | (20 | ) | (7 | ) | 17 | (21 | ) | 17 | ||||||||||||||||||||
Smartphone change in deferred revenue and amortization of in-process development contracts | 798 | 240 | 875 | 4,897 | 57 | 534 | (167 | ) | (167 | ) | |||||||||||||||||||||||
Total change in deferred revenues and amortization of in-process development contracts | 735 | 234 | 880 | 4,877 | 50 | 551 | (188 | ) | (150 | ) | |||||||||||||||||||||||
Non-GAAP Revenues | |||||||||||||||||||||||||||||||||
Featurephone | 10,415 | 8,247 | 7,253 | 5,092 | 4,158 | 3,727 | 2,903 | 2,353 | |||||||||||||||||||||||||
Smartphone | 6,746 | 9,667 | 10,532 | 14,959 | 17,436 | 20,445 | 18,256 | 18,478 | |||||||||||||||||||||||||
Total non-GAAP Revenues | 17,161 | 17,914 | 17,785 | 20,051 | 21,594 | 24,172 | 21,159 | 20,831 | |||||||||||||||||||||||||
GAAP gross profit | 11,769 | 13,856 | 11,147 | 11,046 | 18,234 | 20,552 | 18,128 | 17,856 | |||||||||||||||||||||||||
Change in deferred revenues and amortization of in-process development contracts | 735 | 234 | 880 | 4,877 | 50 | 551 | (188 | ) | (150 | ) | |||||||||||||||||||||||
Amortization of intangible assets | 817 | 703 | 2,375 | 1,552 | 753 | 932 | 1,025 | 1,073 | |||||||||||||||||||||||||
Change in deferred royalty expense | 33 | 20 | 1 | (99 | ) | 60 | 67 | (30 | ) | (121 | ) | ||||||||||||||||||||||
Non-GAAP gross profit | 13,354 | 14,813 | 14,403 | 17,376 | 19,097 | 22,102 | 18,935 | 18,658 | |||||||||||||||||||||||||
GAAP operating expense | 14,347 | 15,436 | 18,462 | 20,807 | 24,269 | 25,769 | 22,311 | 24,527 | |||||||||||||||||||||||||
Stock-based compensation | (397 | ) | (505 | ) | (838 | ) | (1,370 | ) | (3,836 | ) | (3,038 | ) | 2,878 | (1,826 | ) | ||||||||||||||||||
Amortization of intangible assets | - | - | (330 | ) | (495 | ) | (495 | ) | (495 | ) | (495 | ) | (495 | ) | |||||||||||||||||||
Transitional costs | - | - | (981 | ) | (326 | ) | (173 | ) | (30 | ) | (192 | ) | (94 | ) | |||||||||||||||||||
Change in fair value of Blammo earnout | - | - | 178 | (117 | ) | (645 | ) | (386 | ) | 954 | (90 | ) | |||||||||||||||||||||
Impairment of goodwill | - | - | - | - | - | - | (3,613 | ) | - | ||||||||||||||||||||||||
Restructuring charge | (490 | ) | (147 | ) | - | 92 | - | (320 | ) | (213 | ) | (838 | ) | ||||||||||||||||||||
Non-GAAP operating expense | 13,460 | 14,784 | 16,491 | 18,591 | 19,120 | 21,500 | 21,630 | 21,184 | |||||||||||||||||||||||||
GAAP operating loss | (2,578 | ) | (1,580 | ) | (7,315 | ) | (9,761 | ) | (6,035 | ) | (5,217 | ) | (4,183 | ) | (6,671 | ) | |||||||||||||||||
Change in deferred revenues and amortization of in-process development contracts | 735 | 234 | 880 | 4,877 | 50 | 551 | (188 | ) | (150 | ) | |||||||||||||||||||||||
Non-GAAP cost of revenues adjustment | 850 | 723 | 2,376 | 1,453 | 813 | 999 | 995 | 952 | |||||||||||||||||||||||||
Stock-based compensation | 397 | 505 | 838 | 1,370 | 3,836 | 3,038 | (2,878 | ) | 1,826 | ||||||||||||||||||||||||
Amortization of intangible assets | - | - | 330 | 495 | 495 | 495 | 495 | 495 | |||||||||||||||||||||||||
Transitional costs | - | - | 981 | 326 | 173 | 30 | 192 | 94 | |||||||||||||||||||||||||
Change in fair value of Blammo earnout | - | - | (178 | ) | 117 | 645 | 386 | (954 | ) | 90 | |||||||||||||||||||||||
Impairment of goodwill | - | - | - | - | - | - | 3,613 | - | |||||||||||||||||||||||||
Restructuring charge | 490 | 147 | - | (92 | ) | - | 320 | 213 | 838 | ||||||||||||||||||||||||
Non-GAAP operating income/(loss) | (106 | ) | 29 | (2,088 | ) | (1,215 | ) | (23 | ) | 602 | (2,695 | ) | (2,526 | ) | |||||||||||||||||||
GAAP net loss | (3,172 | ) | (1,752 | ) | (6,158 | ) | (10,019 | ) | (6,841 | ) | (2,988 | ) | (3,563 | ) | (7,067 | ) | |||||||||||||||||
Change in deferred revenues and amortization of in-process development contracts | 735 | 234 | 880 | 4,877 | 50 | 551 | (188 | ) | (150 | ) | |||||||||||||||||||||||
Non-GAAP cost of revenues adjustment | 850 | 723 | 2,376 | 1,453 | 813 | 999 | 995 | 952 | |||||||||||||||||||||||||
Non-GAAP operating expense adjustment | 887 | 652 | 1,971 | 2,216 | 5,149 | 4,269 | 681 | 3,343 | |||||||||||||||||||||||||
Foreign currency exchange loss/(gain) | (198 | ) | (363 | ) | (344 | ) | 116 | 373 | (205 | ) | 460 | (263 | ) | ||||||||||||||||||||
Release of tax liabilities | - | - | - | - | - | (2,427 | ) | - | - | ||||||||||||||||||||||||
Non-GAAP net income/(loss) | $ | (898 | ) | $ | (506 | ) | $ | (1,275 | ) | $ | (1,357 | ) | $ | (456 | ) | $ | 199 | $ | (1,615 | ) | $ | (3,185 | ) | ||||||||||
Reconciliation of net loss and net loss per share: | |||||||||||||||||||||||||||||||||
GAAP net loss per share - basic and diluted | $ | (0.06 | ) | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.16 | ) | $ | (0.11 | ) | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.11 | ) | |||||||||
Non-GAAP net income/(loss) per share - basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | 0.00 | $ | (0.03 | ) | $ | (0.05 | ) | ||||||||||
Shares used in computing Non-GAAP basic net income/(loss) per share | 52,048 | 54,587 | 60,461 | 62,973 | 63,229 | 63,802 | 64,562 | 65,678 | |||||||||||||||||||||||||
Shares used in computing Non-GAAP diluted net income/(loss) per share | 52,048 | 54,587 | 60,461 | 62,973 | 63,229 | 69,490 | 64,562 | 65,678 | |||||||||||||||||||||||||
Non-GAAP operating expense break-out: | |||||||||||||||||||||||||||||||||
GAAP research and development expense | $ | 7,166 | $ | 8,439 | $ | 10,808 | $ | 12,660 | $ | 15,033 | $ | 15,697 | $ | 9,979 | $ | 13,566 | |||||||||||||||||
Transitional costs | - | - | (219 | ) | (23 | ) | (68 | ) | (1 | ) | (45 | ) | (70 | ) | |||||||||||||||||||
Stock-based compensation | (100 | ) | (131 | ) | (356 | ) | (800 | ) | (3,260 | ) | (2,396 | ) | 3,388 | (1,223 | ) | ||||||||||||||||||
Non-GAAP research and development expense | 7,066 | 8,308 | 10,233 | 11,837 | 11,705 | 13,300 | 13,322 | 12,273 | |||||||||||||||||||||||||
GAAP sales and marketing expense | 3,757 | 3,344 | 3,576 | 3,930 | 4,375 | 4,701 | 5,545 | 6,272 | |||||||||||||||||||||||||
Transitional costs | - | - | (2 | ) | (5 | ) | - | - | (15 | ) | (24 | ) | |||||||||||||||||||||
Stock-based compensation | (66 | ) | (94 | ) | (96 | ) | (95 | ) | (115 | ) | (155 | ) | (73 | ) | (43 | ) | |||||||||||||||||
Non-GAAP sales and marketing expense | 3,691 | 3,250 | 3,478 | 3,830 | 4,260 | 4,546 | 5,457 | 6,205 | |||||||||||||||||||||||||
GAAP general & administrative expense | 2,934 | 3,506 | 3,748 | 3,814 | 4,366 | 4,556 | 2,466 | 3,356 | |||||||||||||||||||||||||
Transitional costs | - | - | (760 | ) | (298 | ) | (105 | ) | (29 | ) | (132 | ) | - | ||||||||||||||||||||
Change in fair value of Blammo earnout | - | - | 178 | (117 | ) | (645 | ) | (386 | ) | 954 | (90 | ) | |||||||||||||||||||||
Stock-based compensation | (231 | ) | (280 | ) | (386 | ) | (475 | ) | (461 | ) | (487 | ) | (437 | ) | (560 | ) | |||||||||||||||||
Non-GAAP general and administrative expense | $ | 2,703 | $ | 3,226 | $ | 2,780 | $ | 2,924 | $ | 3,155 | $ | 3,654 | $ | 2,851 | $ | 2,706 |
Glu Mobile Inc. Non-GAAP Adjusted EBITDA (in thousands, except per share data) (unaudited) |
||||||||||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||||||||||
March 31, 2011 |
June 30, 2011 |
September 30, 2011 |
December 31, 2011 |
March 31, 2012 |
June 30, 2012 |
September 30, 2012 |
December 31, 2012 |
|||||||||||||||||||||||||
GAAP net loss | $ | (3,172 | ) | $ | (1,752 | ) | $ | (6,158 | ) | $ | (10,019 | ) | $ | (6,841 | ) | $ | (2,988 | ) | $ | (3,563 | ) | $ | (7,067 | ) | ||||||||
Change in deferred revenues and amortization of in-process development contracts | 735 | 234 | 880 | 4,877 | 50 | 551 | (188 | ) | (150 | ) | ||||||||||||||||||||||
Change in deferred royalty expense | 33 | 20 | 1 | (99 | ) | 60 | 67 | (30 | ) | (121 | ) | |||||||||||||||||||||
Amortization of intangible assets | 817 | 703 | 2,705 | 2,047 | 1,248 | 1,427 | 1,520 | 1,568 | ||||||||||||||||||||||||
Depreciation | 427 | 406 | 470 | 543 | 562 | 556 | 554 | 696 | ||||||||||||||||||||||||
Stock-based compensation | 397 | 505 | 838 | 1,370 | 3,836 | 3,038 | (2,878 | ) | 1,826 | |||||||||||||||||||||||
Change in fair value of Blammo earnout | - | - | (178 | ) | 117 | 645 | 386 | (954 | ) | 90 | ||||||||||||||||||||||
Transitional costs | - | - | 981 | 326 | 173 | 30 | 192 | 94 | ||||||||||||||||||||||||
Impairment of goodwill | - | - | - | - | - | - | 3,613 | - | ||||||||||||||||||||||||
Restructuring charge | 490 | 147 | - | (92 | ) | - | 320 | 213 | 838 | |||||||||||||||||||||||
Foreign currency exchange loss/(gain) | (198 | ) | (363 | ) | (344 | ) | 116 | 373 | (205 | ) | 460 | (263 | ) | |||||||||||||||||||
Interest and other (income)/expense, net | 18 | 34 | - | (10 | ) | (7 | ) | (5 | ) | (5 | ) | (1 | ) | |||||||||||||||||||
Income tax provision/(benefit) | 774 | 501 | (813 | ) | 152 | 440 | (2,019 | ) | (1,075 | ) | 660 | |||||||||||||||||||||
Total Non-GAAP Adjusted EBITDA | $ | 321 | $ | 435 | $ | (1,618 | ) | $ | (672 | ) | $ | 539 | $ | 1,158 | $ | (2,141 | ) | $ | (1,830 | ) |
In addition to the reasons stated above, which are generally applicable to each of the items Glu excludes from its non-GAAP financial measures, Glu believes it is appropriate to exclude certain items for the following reasons:
Change in Deferred Revenue and Royalties. At the date we sell certain premium games and micro-transactions, Glu has an obligation to provide additional services and incremental unspecified digital content in the future without an additional fee. In these cases, we recognize the revenue and any associated royalty expense on a straight-line basis over the estimated life of the user. Internally, Glu’s management excludes the impact of the changes in deferred revenue and royalties related to its premium and freemium games in its non-GAAP financial measures when evaluating the company’s operating performance, when planning, forecasting and analyzing future periods, and when assessing the performance of its management team. Glu believes that excluding the impact of the changes in deferred revenue and royalties from its operating results is important to facilitate comparisons to prior periods during which Glu did not delay the recognition of significant amounts of revenue related to its games and to understand Glu’s operations.
Amortization of In-Process Development Contracts. In conjunction with the Griptonite acquisition, Glu assumed the remaining obligations to perform services under Griptonite’s development contracts. The estimated fair value of the future, excess profits from these contracts was recorded in purchase accounting and is amortized as a reduction to revenue as services are performed. When analyzing the operating performance of an acquired entity, Glu’s management focuses on the total return provided by the investment without taking into consideration any fair value adjustments made for accounting purposes. Because the final purchase price paid for an acquisition necessarily reflects the accounting value assigned to both the consideration paid and to the intangible assets (including goodwill) acquired, when analyzing the operating performance of an acquisition in subsequent periods, the Company’s management excludes the GAAP impact of any adjustments to the fair value of these acquisition-related balances to its financial results. Glu believes that excluding the impact of the amortization of the customer contract value from its operating results is important as they do not reflect its ongoing operations and that investors benefit from a supplemental non-GAAP financial measure that excludes these charges.
Amortization of Intangible Assets. When analyzing the operating performance of an acquired entity, Glu's management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid) without taking into consideration any allocations made for accounting purposes. Because the purchase price for an acquisition necessarily reflects the accounting value assigned to intangible assets (including acquired in-process technology and goodwill), when analyzing the operating performance of an acquisition in subsequent periods, Glu's management excludes the GAAP impact of acquired intangible assets to its financial results. Glu believes that such an approach is useful in understanding the long-term return provided by an acquisition and that investors benefit from a supplemental non-GAAP financial measure that excludes the accounting expense associated with acquired intangible assets.
Stock-Based Compensation Expense. Glu adopted ASC 718, "Compensation – Stock Compensation" beginning in its fiscal year ended December 31, 2006. Included in the stock compensation expense is the contingent consideration potentially issuable to the Blammo employees who were former shareholders of Blammo, which is recorded as research and development expense over the term of the earn-out periods, since these employees are primarily employed in product development. Glu re-measures the fair value of the contingent consideration each reporting period and only records a compensation expense for the portion of the earn-out target which is likely to be achieved. In addition, Glu is exposed to potential continued fluctuations in the fair market value of the contingent consideration in each reporting period, since re-measurement is impacted by changes in Glu’s share price and the assumptions used by Glu. When evaluating the performance of its consolidated results, Glu does not consider stock-based compensation charges. Likewise, Glu's management team excludes stock-based compensation expense from its short and long-term operating plans. In contrast, Glu's management team is held accountable for cash-based compensation and such amounts are included in its operating plans. Further, when considering the impact of equity award grants, Glu places a greater emphasis on overall stockholder dilution rather than the accounting charges associated with such grants. Glu believes it is useful to provide a non-GAAP financial measure that excludes stock-based compensation in order to better understand the long-term performance of its business.
Restructuring Charges. Glu undertook restructuring activities in the first, second and fourth quarters of 2011 and the second, third and fourth quarters of 2012 and recorded (1) a non-cash restructuring charge due to vacating a portion of its offices in Russia, (2) cash restructuring charges due to the termination of certain employees in its Brazil, China, Europe, Russia and U.S. offices and (3) non-cash adjustments related to initial, estimated restructuring payments no longer deemed payable. Glu recorded the severance costs as an operating expense when it communicated the benefit arrangement to the employee and no significant future services, other than a minimum retention period, were required of the employee to earn the termination benefits. Glu believes that these restructuring charges do not reflect its ongoing operations and that investors benefit from a supplemental non-GAAP financial measure that excludes these charges.
Change in Fair Value of Blammo Earnout. As part of the acquisition of Blammo, Glu committed to issue additional consideration in the form of Glu’s common stock to the former, non-employee Blammo shareholders if certain revenue targets are achieved. Glu recorded the estimated contingent consideration liability at acquisition and will adjust the fair value of the liability each reporting period. When analyzing the operating performance of an acquired entity, Glu’s management focuses on the total return provided by the investment (i.e., operating profit generated from the acquired entity as compared to the purchase price paid including the final amounts paid for contingent consideration) without taking into consideration any expenses recognized post-acquisition related to the change in fair value of the contingent consideration. Because the final purchase price paid for an acquisition necessarily reflects the accounting value assigned to both the consideration, including the contingent consideration, paid and to the intangible assets (including goodwill) acquired, when analyzing the operating performance of an acquisition in subsequent periods, the Company’s management excludes the GAAP impact of any adjustments to the fair value of these acquisition-related balances to its financial results. Glu believes that the fair value adjustments affect comparability from period to period and that investors benefit from a supplemental non-GAAP financial measure that excludes these charges.
Transitional Costs. GAAP requires expenses to be recognized for various types of events associated with a business acquisition such as legal, accounting and other deal related expenses. Additionally, Glu has incurred various costs related to the transition and integration of Blammo, GameSpy and Griptonite into Glu’s operations. Glu recorded these non-recurring acquisition and transitional costs as operating expenses when they were incurred. Glu believes that these acquisition and transitional costs affect comparability from period to period and that investors benefit from a supplemental non-GAAP financial measure that excludes these expenses.
Impairment of Goodwill. In accordance with ASC 350 “Goodwill and Other Intangible Assets” Glu performs its annual goodwill impairment test as of September 30. Glu recorded a goodwill impairment charge in the third quarter of 2012 as the fair value of one of its three reporting units was determined to be below its carrying value. As this impairment is non-recurring, Glu believes it does not reflect the Company’s ongoing operations and that investors benefit from a supplemental non-GAAP financial measure that excludes this impairment, enabling them to compare the Company’s core operating results in different periods without this variability.
Release of tax liabilities. In the second quarter of 2012, Glu recorded a one-time, non-cash income tax benefit related to the release of certain foreign income tax liabilities upon the expiration of the statute of limitations. Glu believes that this one-time tax benefit does not reflect its ongoing operations and that investors benefit from a supplemental non-GAAP financial measure that excludes this benefit.
Foreign currency exchange gains and losses. Foreign currency exchange gains and losses represent the net gain or loss that Glu has recorded for the impact of currency exchange rate movements on cash and other assets and liabilities denominated in foreign currencies related to the revaluation of assets and liabilities. Accordingly, foreign currency exchange gains and losses are generally unpredictable and can cause Glu’s reported results to vary significantly. Due to the unusual magnitude of these gains and losses, and the fact that Glu has not engaged in hedging or taken other actions to reduce the likelihood of incurring a sizeable net gain or loss in future periods, Glu began, with the quarter ended December 31, 2008, to present non-GAAP net loss and net loss per share excluding foreign exchange gains and losses for comparability purposes. Glu believes that these gains and losses do not reflect its ongoing operations and that investors benefit from a supplemental non-GAAP financial measure that excludes these items, enabling investors to compare Glu’s core operating results in different periods without this variability. Foreign exchange gains/(losses) recognized during 2011 and 2012 were as follows (in thousands):
March 31, 2011 | $ | 198 | ||
June 30, 2011 | 363 | |||
September 30, 2011 | 344 | |||
December 31, 2011 | (116 | ) | ||
FY 2011 | $ | 789 | ||
March 31, 2012 | $ | (373 | ) | |
June 30, 2012 | $ | 205 | ||
September 30, 2012 | $ | (460 | ) | |
December 31, 2012 | $ | 263 | ||
FY 2012 | $ | (365 | ) |
CONTACT:
Media & Investor Relations:
ICR, Inc.
Seth
Potter, 646-277-1230
ir@glu.com
Exhibit 99.02
Glu Mobile Q412 Earnings Call February 5, 2013
Safe-Harbor Statement This presentation contains "forward-looking" statements including those regarding: forecasted smartphone and feature phone unit sales growth and that we are early in the smartphone upgrade cycle globally; the potential growth opportunity in Glu’s addressable consumer base; forecasted smartphone and tablet unit sales growth in comparison to projected sales growth of computers; Glu being well positioned for where the mobile games market is going with respect to social gaming; our guidance for Q1 2013 and FY 2013; and our target non-GAAP operating model; and forecasted mobile device subscriber growth. 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 freemium games for smartphones and tablets, the risk that we do not maintain our good relationships with Apple and Google; the risk that our development expenses for games for smartphones are greater than we anticipate; the risk that our recently and newly launched games are less popular than anticipated; 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 social, freemium gaming, is smaller than anticipated; and other risks detailed under the caption "Risk Factors" in our Form 10-Q filed with the Securities and Exchange Commission on November 9, 2012 and our other SEC filings. You can locate these reports through our website at http://www.glu.com/investors. These "forward-looking" statements are based on estimates and information available to us on February 5, 2013 and 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.
Use of Non-GAAP Financial Measures © Glu Mobile Inc. – Proprietary Glu uses in this presentation 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 non-GAAP revenues, non-GAAP Smartphone revenues, non-GAAP freemium revenues, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating margin, non-GAAP Profit/(Loss) and Adjusted EBITDA. These non-GAAP financial measures exclude the following items from Glu's unaudited consolidated statements of operations: •Change in deferred revenues and royalties; •Amortization of in-process development contracts; •Amortization of intangible assets; •Stock-based compensation expense; •Restructuring charges; •Change in fair value of Blammo earnout; •Transitional costs; •Impairment of goodwill; •Release of tax liabilities; and •Foreign currency exchange gains and losses primarily related to the revaluation of assets and liabilities. In addition, Glu has included in this presentation “Adjusted EBITDA” figures which are used to evaluate Glu’s operating performance and is defined as non-GAAP operating income/(loss) excluding depreciation. 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. For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please refer to the tables attached to Glu’s earnings press release for the quarter ended December 31, 2012, which is available on our website at http://www.glu.com/investors. Page 3
Intersection of Two Rising Tides: 1)Growth in gaming on mobile devices 2)Growth in freemium gaming © Glu Mobile Inc. – Proprietary Page 4 Leading Freemium Social Mobile Gaming Company
•Featurephone focus •Branded IP/71% gross margin •Titles are packaged goods •Premium pricing •No community/social Page 5 Evolution of Mobile Gaming © Glu Mobile Inc. – Proprietary Now Compelling to Mass Market + •Smartphone & Tablet •Original IP/90% gross margin •Persistent titles •Freemium with virtual goods •Games are social
Smartphone Inflection Point © Glu Mobile Inc. – Proprietary Page 6 •Very early in smartphone upgrade cycle globally -500 1,000 1,500 2,000 2,500 201120122013201420152016Worldwide sales (millions)Data Source:BI Intelligence Global Smartphone Unit Sales forecast 2/29/2012SmartphoneSalesFeaturePhone SalesSmartphones projected to reach 44% of total handset sales
-1,000 2,000 3,000 4,000 5,000 6,000 SmartphoneMobile PhoneGlobal Units (MM)Global Smartphone vs. Mobile Phone Users, 2012E5x 1.0B Smartphone Users 5.0B Mobile Phone Users
Smartphones & Tablets: Two Screens of High Growth © Glu Mobile Inc. – Proprietary Page 8 -500 1,000 1,500 2,000 2,500 (in millions)TabletsSmartphoneLaptopDesktopData Source:BI Intelligence Global Smartphone Unit Sales forecast 2/29/2012; Gartner 4/10/2012 2011 2012 20132014 2015 2016
Corporate Overview
Corporate Overview •Approx. 600 employees and full-time contractors •6 global studios •18 development teams Toronto San Francisco Seattle Moscow Beijing Hyderabad
Evolution of Glu Mobile © Glu Mobile Inc. – Proprietary Page 11 Freemium, social, original IP & smartphone focus $13.5m raised $15.9m raised First freemium products launched Second batch of freemium products launched Acquisition of Griptonite & Blammo 2nd generation freemium titles Acquisition of Deer Hunter Brand Acquisition of GameSpy Technologies New President of Studios Creation of Glu Publishing
Annual Non-GAAP Revenue Page 12 © Glu Mobile Inc. – Proprietary 1.87.025.746.266.989.883.764.372.987.801020304050607080901002003200420052006200720082009201020112012Revenue ($mm)Featurephone RevSmartphone Rev 1
Success of Original IP Titles Drives Gross Margin Growth © Glu Mobile Inc. – Proprietary Page 13 Note: 2010 figures are GAAP. All figures for Q111 and later are non-GAAP 73%73%75%76%78%83%81%87%88%91%89%90%70%75%80%85%90%95%Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Total Glu GAAP/Non-GAAP GM%GM% w/o impairments & amortization of intangibles
Glu Tightly Aligned with Ecosystem • IAP/Sub Distribution Channel Technology Integration New Devices at Launch Quality Pipeline 90%+ Featuring Track Record • IAP/Subscriptions • Universal currency • Beam • APK
Public Company Rankings No. Titles in Top 200 Grossing USA USA 4 2 3 0 8 9 1 3 Korea 5 9 1 0 6 17 1 2 Korea China 3 5 13 3 13 0 5 3 7 1 1 0 5 2 5 1 Apple iPhone and Google Play Games Category Data Source: AppAnnie 12/31/2012 8 9 7 5 13 5 5 1
Note: MAU/DAU calculation methodology was changed in Q411 to more accurately reflect the user metrics which had the effect of increasing our Q411 MAU/DAU by less than 5% from what it would have been under our previous methodology. This change affects the comparability of Q411 and subsequent MAU/DAU data to prior quarters. © Glu Mobile Inc. – Proprietary Page 16 953 1,639 2,103 2,873 3,218 3,412 3,835 3,535 - 1,000 2,000 3,000 4,000 5,000Q111Q211Q311Q411Q112Q212Q312Q412DAUDaily Active Users (Average DAU) (In 000s)11,882 16,517 22,090 31,363 29,814 29,034 37,676 34,795 0%5%10%15%20% - 10,000 20,000 30,000 40,000 50,000Q111Q211Q311Q411Q112Q212Q312Q412DAU/MAU %MAUMonthly Active Users (MAU) (In 000s)MAUDAU/MAU % User Metrics •New installs reached 54M in Q412, 21% increase vs. Q411 •Q412 DAU increased 23% vs. Q411; Q412 MAU increased 11% vs. Q411
Dec 2012 Conversion Metrics* © Glu Mobile Inc. – Proprietary 9.1¢ 8.7¢ 8.5¢ 7.5¢ 7.0¢ 6.6¢ 4.7¢ 4.4¢ 6.7¢ ARPDAU** Average*** *All metrics are average for the month. Efforts were taken to remove jailbroken and hacked transactions from calculation – including detecting which devices had purchases come through a jailbroken OS and how much & how often players made IAPs. All numbers are for English, iOS SKUs only. All metrics are for total active users, not total active unique users. **Calculation includes revenue from all sources (not only IAP). *** Average includes titles on this page only: Stardom, DH:R, CKZ2, CK2, Frontline Commando, CK, EW2, BGL. 0.8% 0.7% 0.8% 0.9% 0.8%
Future of Mobile Gaming
Social Gaming 2.0 © Glu Mobile Inc. – Proprietary Page 19 Resource mgmt and casual games broaden audience of gamers on mobile devices Audience evolves to want deeper, more immersive and realistic experiences Glu positioned well for where the market is going Success Pillars Core gameplay Production values Reach Monetization
Future of Mobile Gaming 2.0 © Glu Mobile Inc. – Proprietary Page 20 3D Realistic 2D Cartoon Production Values Multi-Player In-Game Community Longer session Single Player Facebook Short session Core Gameplay Phones & Tablets iOS & Android iOS Phone Consumer Reach 1.0 Viability: 1-2 pillars working 2.0 Winners: All pillars working Deep Complex Simple Monetization System 2013 Focus
New Division: 3rd Party Publishing
Porting Power •Glu is the gateway beyond iOS •Uniquely positioned as turnkey solution for access beyond iOS •Never been done at scale with rev share – preserves upside Page 22
What Glu Offers 3rd Party Developers © Glu Mobile Inc. – Proprietary Page 23 Technology Distribution Funding Reach Expertise •Featuring •Direct marketing •Cross promo •In-game community •Leaderboards •Automated merchandising •Android subscriptions •Android porting •MacOS, W8 extension •Translation •Royalty advances •Marketing spend •Investment •Western culture •Monetization
Why Work with Glu? English, Chinese, Korean, Japanese, Portuguese, Russian, French, German, Italian, Spanish Developer Ourselves OS Reach Device Coverage (700+ devices) Localization (10 languages at launch)
Quad Screen Future © Glu Mobile Inc. – Proprietary
De-Risked Franchise Creation Initial Test Validation Future
Financials
$17.5$15.9$15.3$15.5$17.2$17.9$17.8$20.1$21.6$24.2$21.2$20.8-5 10 15 20 25 30 Q110Q210Q310Q410Q111Q211Q311Q411Q112Q212Q312Q412Non-GAAP Revenue ($M)Smartphone RevFeaturephone RevPage 28 Smartphone
Non-GAAP Smartphone Revenue Mix Page 29 © Glu Mobile Inc. – Proprietary 3%14%34%29%28%30%33%32%6.7 9.7 10.5 15.0 17.4 20.4 18.3 18.5 74%71%47%65%67%64%60%60%510152025Q111Q211Q311Q411Q112Q212Q312Q412($M)Non-GAAP Revenue by PlatformAll OtherAndroidiOS31%42%56%59%68%63%59%70%3%2%6%9%10%13%13%10%36%36%14%22%13%18%18%11%510152025Q111Q211Q311Q411Q112Q212Q312Q412($M)Non-GAAP Revenue by CategoryPremiumOffers & Incented AdsNon-Incented AdsIn-App Purchases (incl. freemium preloads)
$18.5M Non-GAAP Smartphone Revenue in Q412 Frontline Commando $1.8M Stardom: The A-List $0.9M Contract Killer: Zombies $0.7M Blood & Glory $0.4M Eternity Warriors 2 $2.5M Blood & Glory: Legend $1.0M Indestructible $0.4M Deer Hunter Reloaded $1.5M Contract Killer 2 10/24 $2.7M Contract Killer Zombies 2 11/28 $0.5M Death Dome 10/11 $0.4M Launch Date
Q412 Financial Results Summary (non-GAAP) © Glu Mobile Inc. – Proprietary Page 31 ($ in millions) Q412 Q312 Q/Q Q411 Y/Y Featurephone Revenue2.42.9(19%)5.1(54%) Smartphone Revenue18.518.31%15.024%Total Revenue $ 20.8 $ 21.2 (2%) $ 20.1 4%Gross Margin 18.718.9(1%)17.47%Gross Margin %90%89%8 bp87%291 bpOperating Expense 21.221.6-2%18.614%Operating Income/(Loss) (2.5) (2.7) (1.2)Adjusted EBITDA $ (1.8) $ (2.1)(15%) $ (0.7)172%
Maintaining Strong Balance Sheet © Glu Mobile Inc. – Proprietary Page 32 ($ in millions) Q412Q312Q411Cash and cash equivalents 22.3 24.1 32.2 Accounts receivable, net 11.9 14.6 11.8 Prepaid expenses, royalties and other current assets 2.5 3.0 2.4 Other assets 5.3 5.1 4.3 Intangible assets & goodwill 30.3 31.7 32.1 Total Assets $ 72.3 $ 78.5 $ 82.8 Accounts payable and accrued liabilities 10.2 9.4 7.8 Accrued expenses, royalties and other liabilities 14.2 15.3 18.7 Deferred revenue 9.0 8.8 7.1 Common stock/Paid in capital 271.0 269.8 260.8 Accumulated deficit & other comprehensive income(232.1)(224.8) (211.6)Total Liabilities and Stockholders’ Equity $ 72.3 $ 78.5 $ 82.8
Q113 and Full Year 2013 Guidance and Long Term Model
Q113 Guidance (Non-GAAP) © Glu Mobile Inc. – Proprietary Page 34 ($ in millions, except EPS) Q412 ActualQ113 GuidanceQ113 Guidance Hih Low High Featurephone Revenue2.4 1.01.5 Smartphone Revenue18.5 16.017.0Total Revenue20.8 17.018.5Gross Margin (%) 90%89%90%Operating Expense21.2 20.520.7Operating Income/(Loss) (2.5)(5.4)(4.1) Depreciation Addback 0.7 0.80.8Adjusted EBITDA(1.8)(4.6)(3.3)Net Income/(Loss)(3.2)(5.6)(4.3)Basic Shares65.7 66.266.2Diluted Shares69.2 70.870.8Earnings/(Loss) Per Basic Share $(0.05)$(0.08)$(0.06)
2013 Full Year Guidance (Non-GAAP) © Glu Mobile Inc. – Proprietary Page 35 ($ in millions)Low HighLowHigh Featurephone Revenue13.1 4.0 4.0 -70%-70% Smartphone Revenue74.6 80.0 88.0 7%18%Total Revenue87.884.092.0-4%5%Gross Margin (%) 91.5%91.5%Operating Expense87.7 89.3 Operating Income/(Loss)(10.8)(5.1) Depreciation Addback 3.3 3.3 Adjusted EBITDA(2.3)(7.5)(1.8)Net Income/(Loss)(11.6)(5.9)Basic Shares (millions)Diluted Shares (millions)Earnings/(Loss) Per Basic Share (0.17)(0.09)Cash Balance (millions)2.4(5.1)(0.08)2013 Guidance vs. 201220122013 Guidance$14.0+$22.364.367.389.8%69.473.083.4(4.6)
Target Operating Model (Non-GAAP) Gross Margin R&D Sales & Marketing G&A Operating Margin Adjusted EBITDA •Note: Gross margin excludes change in deferred revenue & royalties and amortization of intangible assets. R&D, S&M and G&A exclude stock based-compensation expense. Operating margin excludes amortization of intangible assets, restructuring and transitional expenses, impairment of goodwill and stock-based compensation expense. Adjusted EBITDA is Non-GAAP Operating Margin excluding depreciation expense. 82% 51% 20% 16% (5)% (2)% 2011 90% 36-40% 18-19% 10-11% 20-25% 22-26% Long-Term Target © Glu Mobile Inc. – Proprietary Page 36 90% 58% 23% 14% (5)% (3)% 2012 •Significant leverage expected after hitting break-even
Key Statistics © Glu Mobile Inc. – Proprietary Page 37 •Cash balance as of 12/31/2012 •Average Daily Volume is calculated using the last 90 calendar days (in millions except per share and volume data)Stock Price$2.59 52 Week High$5.90 52 Week Low$1.99 Basic Shares Outstanding65.7 Avg. Daily Volume (last 90 days)1,585,260 Market Capitalization$170.1 Debt$0 Cash*$22.3 Enterprise Value$147.8 Market Statistics (as of January 31, 2013)
Key Operating Metrics •Detailed figures referred to in the 2/5/2013 earnings call, CFO script: Page 38 © Glu Mobile Inc. – Proprietary (All Revenue figures are non-GAAP)Q311Q411Q112Q212Q312Q412Freemium Smartphone Revenue (in thousands)$8,142$13,480$15,979$19,233$16,508$16,651Premium Smartphone Revenue (in thousands)$2,390$1,479$1,457$1,212$1,748$1,828Sub-total Smartphone Revenue (in thousands)$10,532$14,959$17,436$20,445$18,256$18,478Featurephone Revenue (in thousands)$7,253$5,092$4,158$3,727$2,903$2,353Total Revenue (in thousands)$17,785$20,051$21,594$24,172$21,159$20,831Freemium Smartphone Revenue Growth Q/Q6%66%19%20% (14%)1%Freemium Smartphone Revenue % of Total Smartphone Revenue77%90%92%94%90%90%Smartphone Revenue Growth Y/Y326%340%158%111%73%24%Smartphone Revenue % of total59%75%81%85%86%89%Original IP % of total non-GAAP Revenues**53%70%76%84%82%84%Original IP % of Smartphone non-GAAP Revenues73%86%89%95%91%91%Daily Active Users (DAU)* (in millions)2.12.93.23.43.83.5Monthly Active Users (MAU)* (in millions)22.131.429.829.037.734.8Installs (in millions)29.444.755.045.952.854.0Cumulative Installs (in millions)131.3176.1231.1277.0329.8383.8In-App Purchase billable transactions (in thousands)8661,5222,4892,4991,8661,859Average Revenue per billable transaction$6.40$5.79$4.71$5.06$5.70$6.81non-GAAP Operating Expenses (in thousands)$16,490$18,590$19,119$21,500$21,630$21,184Adjusted EBITDA (in thousands)$(1,618)$(672)$539$1,158$(2,141)$(1,830)Headcount*** (at quarter-end)581585610644663564*DAU & MAU reflects the DAU & MAU figures for the last month of the quarter Above figures represent a more detailed methodology in calculating Original IP % of total non-GAAP revenues. ***FTE only, excludes contractors, temporary employees and consultants**In prior publication Original IP % of total non-GAAP Revenues was reported as 68% in Q411, 75% in Q112 and 83% in Q212.
Glu Mobile: Investment Overview •Strong secular global growth opportunity •Original IP titles driving gross margin improvements •Well positioned for Social Gaming 2.0 Page 39
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