- Q4 non-GAAP revenues of $76.2
million, up 78% year-over-year and significantly exceeding
guidance
- Record Q4 GAAP revenues of $72.9
million
- Q4 Adjusted EBITDA of $14.1 million;
record Adjusted EBITDA margin of 18.5% – both significantly
exceeding guidance
- Record Q4 cash flow from operations
of $19.3 million
- 2014 full year non-GAAP revenue
represents a four-year compounded annual growth rate of 37.9% since
2010
- Full year 2015 non-GAAP revenue
guidance raised significantly
- Signed a five-year, exclusive mobile
gaming partnership with world-renowned singer and songwriter Katy
Perry
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, 2014.
“The fourth quarter marked a fantastic finish to a record year
for Glu, highlighted by all key metrics coming in above guidance,”
stated Niccolo de Masi, Chief Executive Officer of Glu. “The
strength during the quarter was led by the ongoing traction of Kim
Kardashian: Hollywood, Racing Rivals and Deer Hunter 2014, as well
as the solid performance of recently released Contract Killer:
Sniper.”
Mr. de Masi continued, “2014 full year results take our trailing
four-year non-GAAP revenue compound annual growth rate to 37.9%.
Today we are also raising our full year 2015 guidance to record
levels for Glu. I am also delighted to announce a five-year
exclusive mobile gaming partnership with Katy Perry, arguably the
most recognized musician in America following her recent Super Bowl
halftime performance. Glu is focused on building the premier
Hollywood gaming platform and improving the annuity characteristics
of our franchises. We look forward to our growth in 2015 and beyond
with confidence.”
Fourth Quarter 2014 Financial
Highlights:
- Revenue: Total GAAP revenue was
$72.9 million in the fourth quarter of 2014 compared to $34.8
million in the fourth quarter of 2013. Total non-GAAP revenue was
$76.2 million in the fourth quarter of 2014, an increase of 78%
compared to $42.8 million in the fourth quarter of 2013. Non-GAAP
revenue excludes changes in deferred revenue.
- Gross Margin: GAAP gross margin
was 56% in the fourth quarter of 2014 compared to 69% in the fourth
quarter of 2013. Non-GAAP gross margin was 61% in the fourth
quarter of 2014 compared to 73% in the fourth quarter of 2013.
Non-GAAP gross margin excludes changes in deferred revenue, change
in deferred cost of revenues, amortization of intangible assets and
non-cash warrant expense.
- GAAP Operating Income (Loss):
GAAP operating income was $5.1 million in the fourth quarter of
2014 compared to a loss of $(3.5) million in the fourth quarter of
2013.
- Non-GAAP Operating Income:
Non-GAAP operating income was $13.5 million in the fourth quarter
of 2014 compared to $5.5 million during the fourth quarter of 2013.
Non-GAAP operating income excludes changes in deferred revenues and
deferred cost of revenues, amortization of intangible assets,
non-cash warrant expense, stock-based compensation expense,
restructuring charges, change in fair value of the Blammo earnout,
and transitional costs.
- Adjusted EBITDA: Adjusted EBITDA
was $14.1 million for the fourth quarter of 2014, an increase of
127% compared to $6.2 million during the fourth quarter of 2013.
Adjusted EBITDA margin was 18.5% for the fourth quarter of 2014
compared with 14.5% for the fourth quarter of 2013. Adjusted EBITDA
is defined as non-GAAP operating income/(loss) less depreciation.
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by
non-GAAP revenue.
- GAAP Net Income (Loss) and EPS:
GAAP net income was $1.4 million for the fourth quarter of 2014
compared to a GAAP net loss of $(3.5) million for the fourth
quarter of 2013. GAAP EPS was $0.01 for the fourth quarter of 2014,
based on 107.0 million weighted-average diluted shares outstanding,
compared to a GAAP EPS loss of $(0.05) for the fourth quarter of
2013, based on 78.1 million weighted-average basic shares
outstanding.
- Non-GAAP Net Income and EPS:
Non-GAAP net income was $12.2 million for the fourth quarter of
2014 compared to $5.6 million for the fourth quarter of 2013.
Non-GAAP EPS was $0.11 for the fourth quarter of 2014 based on
107.0 million weighted-average diluted shares outstanding, compared
to non-GAAP EPS of $0.07 for the fourth quarter of 2013 based on
81.4 million weighted-average diluted shares outstanding.
- Cash Flows Generated from
Operations: Cash flows generated from operations were $19.3
million for the fourth quarter of 2014 compared to $1.9 million
generated for the fourth quarter of 2013.
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 February 2015, we announced a
five-year, exclusive mobile gaming partnership with Katy Perry. We
will create a free-to-play mobile game using her likeness and voice
that we expect to release in the second half of 2015.
- In November 2014, we announced the
availability of Contract Killer: Sniper.
- In October 2014, we announced the
launch of the first free-to-play Diner Dash game.
“We are very pleased with our strong execution during the fourth
quarter, particularly our ability to achieve record Adjusted EBITDA
margins and operating cash flows,” stated Eric R. Ludwig, Glu’s
EVP, Chief Operating Officer and Chief Financial Officer. “The
increase in our full year 2015 guidance reflects the momentum of
current catalog titles, as well as our confidence in the upcoming
pipeline, which includes a number of sequels to successful
franchises. Glu’s strong balance sheet and global scale positions
the company for sustained growth and profitability in 2015 and
beyond.”
Fiscal 2014 Financial
Highlights:
- Revenues: Total GAAP revenues
were $223.1 million for the year ended December 31, 2014 compared
to $105.6 million for the year ended December 31, 2013. Total
non-GAAP revenues were $241.8 million for the year ended December
31, 2014, an increase of 113% compared to $113.4 million for the
year ended December 31, 2013.
- Gross Margin: GAAP gross margin
was 62% for the year ended December 31, 2014 compared to 65% for
the year ended December 31, 2013. Non-GAAP gross margin was 63% for
the year ended December 31, 2014 compared to 70% for the year ended
December 31, 2013.
- GAAP Operating Income (Loss):
GAAP operating income was $2.1 million for the year ended December
31, 2014 compared to a $(22.8) million loss for the year ended
December 31, 2013.
- Non-GAAP Operating Income
(Loss): Non-GAAP operating income was $32.6 million for the
year ended December 31, 2014 compared to a loss of $(5.0) million
for the year ended December 31, 2013.
- Adjusted EBITDA: Adjusted EBITDA
was $35.1 million for the year ended December 31, 2014 compared to
a $(2.3) million loss for the year ended December 31, 2013.
Adjusted EBITDA margin was 14.5% for the full year of 2014.
- GAAP Net Income (Loss) and EPS:
GAAP net income was $8.1 million for the year ended December 31,
2014 compared to a loss of $(19.9) million for the year ended
December 31, 2013. GAAP EPS was $0.08 for the year ended December
31, 2014, based on 96.9 million weighted-average diluted shares
outstanding, compared to a loss of $(0.28) for the year ended
December 31, 2013, based on 71.5 million weighted-average basic
shares outstanding.
- Non-GAAP Net Income (Loss) and
EPS: Non-GAAP net income was $33.3 million for the year ended
December 31, 2014 compared to a loss of $(5.3) million for the year
ended December 31, 2013. Non-GAAP EPS was $0.34 for the year ended
December 31, 2014 based on 96.9 million weighted-average diluted
shares outstanding, compared to a loss of $(0.07) for the year
ended December 31, 2013 based on 71.5 million weighted-average
basic shares outstanding.
- Cash Flows Generated from (Used in)
Operations: Cash flows generated from operations were $30.6
million for the year ended December 31, 2014 compared to cash flows
used in operations of $(9.6) million for the year ended December
31, 2013.
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 4, 2015:
The following forward-looking statements reflect expectations as
of February 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.
First Quarter Expectations – Quarter Ending March 31,
2015:
- Non-GAAP revenues are expected to be
between $50.0 million and $52.0 million.
- Non-GAAP gross margin is expected to be
approximately 60%.
- Non-GAAP operating expenses are
expected to be between $33.1 million and $32.3 million.
- Adjusted EBITDA, defined as non-GAAP
operating income (loss) excluding depreciation of approximately
$0.9 million, is expected to range from breakeven to a loss of
$(2.0) million.
- Income tax is expected to be an expense
of approximately $0.2 million.
- Non-GAAP net loss is expected to be
between $(1.0) million and $(3.0) million or between $(0.01) and
$(0.03) per weighted-average basic share outstanding, which
excludes approximately $2.1 million of anticipated stock-based
compensation expense, $2.6 million for amortization of intangibles
and $0.1 million of transitional costs related to the Cie Games
integration.
- Weighted-average common shares
outstanding are expected to be approximately 103.8 million basic
and 108.0 million diluted.
2015 Expectations – Full Year Ending December 31,
2015:
- Non-GAAP revenues are expected to be
between $245.0 million and $275.0 million.
- Non-GAAP gross margin is expected to be
approximately 61%.
- Adjusted EBITDA is expected to range
from $30.0 million to $35.0 million.
- Non-GAAP net income is expected to be
between $26.0 million and $31.0 million or between $0.23 and $0.28
per weighted-average diluted share outstanding, which excludes
approximately $11.3 million of anticipated stock-based compensation
expense, $9.7 million for amortization of intangibles, and $0.1
million of transitional costs related to the Cie Games
integration.
- Weighted-average common shares
outstanding are expected to be approximately 104.8 million basic
and 111.0 million diluted.
- We expect to have cash and short-term
investments at December 31, 2015 of at least $85.0 million with no
debt.
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
(866) 582-8907, or if outside the U.S., (760) 298-5046, with
conference ID # 62294869 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 4, 2015, and 8:59 p.m. Pacific
Time, February 11, 2015, by calling (855) 859-2056, or (404)
537-3406, with conference ID # 62294869.
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), the company twitter account
(https://twitter.com/glumobile) and Mr. de Masi’s twitter account
(https://twitter.com/niccolodemasi). Investors, the media,
players or other interested parties can subscribe to the company
blog and twitter feed and Mr. de Masi’s 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 non-GAAP revenues, non-GAAP smartphone revenues, non-GAAP
cost of revenues, non-GAAP operating expenses, non-GAAP gross
profit, non-GAAP gross margin, non-GAAP operating income/(loss),
non-GAAP net income/(loss) and non-GAAP basic and diluted net
income/(loss) per share. These non-GAAP financial measures exclude
the following items from Glu's unaudited consolidated statements of
operations:
- Change in deferred revenues and
deferred cost of revenues;
- Amortization of intangible assets;
- Non-cash warrant expense;
- Stock-based compensation expense;
- Restructuring charges;
- Change in fair value of Blammo
earnout;
- Transitional costs;
- Release of tax liabilities and
valuation allowance; and
- Foreign currency exchange gains and
losses primarily related to the revaluation of assets and
liabilities.
In addition, Glu has included in this release “Adjusted EBITDA”
figures which are used to evaluate Glu’s operating performance.
Adjusted EBITDA is defined as non-GAAP operating income/(loss)
excluding depreciation. Adjusted EBITDA margin is defined as
Adjusted EBITDA divided by non-GAAP revenue.
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 4, 2015”
(“First Quarter Expectations – Quarter Ending March 31, 2015” and
“2015 Expectations – Full Year Ending December 31, 2015”), and the
statements that we are focused on building the premier Hollywood
gaming platform and improving the annuity characteristics of our
franchises, we look forward to our growth in 2015 and beyond with
confidence; we will create a free-to-play mobile game using Katy
Perry’s likeness and voice that we expect to release in Q4-2015;
and our strong balance sheet and global scale positioning us for
sustained growth and profitability in 2015 and beyond. 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 4, 2015"; 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 free-to-play
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 or decline in
popularity and monetization rate more quickly than we anticipate;
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 free-to-play gaming, is
smaller than anticipated; the risk that we may lose a key
intellectual property license; the risk that we are unable to
recruit and retain qualified personnel for developing and
maintaining the games in our product pipeline resulting in reduced
monetization of a game, product launch delays or games being
eliminated from our pipeline altogether and other risks detailed
under the caption "Risk Factors" in our Form 10-Q filed with the
Securities and Exchange Commission on November 10, 2014 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.
About Glu Mobile
Glu Mobile (NASDAQ:GLUU) is a leading global developer and
publisher of free-to-play games for smartphone and tablet devices.
Glu is focused on creating compelling original IP games such as
CONTRACT KILLER, DEER HUNTER, DINER DASH, DINO HUNTER: DEADLY
SHORES, ETERNITY WARRIORS, and FRONTLINE COMMANDO, and branded IP
games including KIM KARDASHIAN: HOLLYWOOD, ROBOCOP: THE OFFICIAL
GAME, and HERCULES: THE OFFICIAL GAME, on the App Store, Google
Play, Amazon App Store, Facebook, Mac App Store, and Windows Phone.
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 major U.S. offices
outside Seattle and in Long Beach, and international locations in
Canada, China, India, Japan, Korea, 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.
CONTRACT KILLER, DEER HUNTER, DINER DASH, DINO HUNTER: DEADLY
SHORES, ETERNITY WARRIORS, FRONTLINE COMMANDO, GLU, GLU MOBILE and
the 'g' character logo are trademarks of Glu Mobile Inc. or its
subsidiaries.
Glu Mobile Inc. Consolidated Balance
Sheets (in thousands) (unaudited) December
31, December 31, 2014
2013 ASSETS Cash and cash equivalents $
70,912 $ 28,496 Accounts receivable, net
32,231
18,305 Prepaid expenses and other current assets 17,421
7,663
Total current assets
120,564
54,464 Property and equipment, net 6,116 5,096 Restricted
cash 1,990 1,730 Other long-term assets 6,674 637 Intangible
assets, net 27,524 5,599 Goodwill 87,964
19,485
Total assets $
250,832
$ 87,011
LIABILITIES AND STOCKHOLDERS'
EQUITY Accounts payable $
11,685
$ 10,657 Accrued liabilities 3,812 1,971 Accrued compensation
10,751 5,378 Accrued royalties 12,440 1,727 Deferred revenues
37,333 18,224
Total current
liabilities 76,021 37,957 Other long-term liabilities
3,105 2,357
Total liabilities
79,126 40,314 Common stock 11 8
Additional paid-in capital 415,766 298,593 Accumulated other
comprehensive (loss)/income (8 ) 307 Accumulated deficit
(244,063
) (252,211 )
Stockholders' equity
171,706
46,697
Total liabilities and stockholders'
equity $
250,832
$ 87,011
Glu
Mobile Inc. Condensed Consolidated Statements of
Operations (in thousands, except per share data)
(unaudited) Three Months Ended Twelve
Months Ended December 31, December 31,
December 31, December 31, 2014
2013 2014
2013 Revenues $ 72,865
$ 34,841 $ 223,146 $
105,613 Cost of revenues: Platform
commissions, royalties and other 29,625 9,803 80,992 32,371
Amortization of intangible assets 2,434 1,004
4,767 4,673
Total cost of
revenues 32,059 10,807
85,759 37,044
Gross profit 40,806
24,034 137,387
68,569 Operating expenses: Research and
development 16,053 12,618 64,284 46,877 Sales and marketing 12,275
10,608 45,076 26,120 General and administrative 7,154 4,162 25,019
15,550 Amortization of intangible assets 127 117 508 1,336
Restructuring charge 67 - 435
1,448
Total operating expenses
35,676 27,505
135,322 91,331
Income/(loss) from operations 5,130 (3,471
) 2,065 (22,762 ) Interest
and other income/(expense), net: Interest income 10 5 30 16
Other expense (988 ) (135 ) (1,502 ) (6
) Interest and other income/(expense), net
(978
) (130 ) (1,472 )
10 Loss before income taxes
4,152 (3,601 ) 593 (22,752
) Income tax (provision)/benefit (2,773 ) 78
7,555 2,843
Net
income/(loss) $ 1,379 $ (3,523
) $ 8,148 $ (19,909 )
Net income /(loss) per share: Basic
$
0.01 $ (0.05 ) $ 0.09
$ (0.28 ) Diluted
$ 0.01
$ (0.05 ) $ 0.08 $
(0.28 ) Weighted average common shares
outstanding: Basic
103,406 78,071 91,826
71,453 Diluted
106,954 78,071 96,922
71,453 Stock-based compensation expense included
in: Research and development $ 736 $ 849 $ 7,422 $ 1,948 Sales
and marketing
209 103
701 303 General and administrative
1,189 632
3,510 2,034
Total stock-based compensation
expense $ 2,134 $ 1,584 $ 11,633 $ 4,285
Glu
Mobile Inc. GAAP to Non-GAAP Reconciliation (in
thousands, except per share data) (unaudited)
For the Three Months Ended
March 31, June 30, September 30, December
31, March 31, June 30, September 30,
December 31, 2013 2013
2013 2013
2014 2014 2014
2014 GAAP revenues
24,605 24,445 21,722 34,841
44,580 40,910 64,791 72,865 Change in
deferred revenues 111 (1,251 ) 886
8,005 2,377 (5,874 )
18,762 3,363
Non-GAAP Revenues
24,716 23,194
22,608 42,846
46,957 35,036
83,553 76,228 GAAP
gross profit 16,069 15,697 12,769
24,034 30,824 28,037 37,720
40,806 Change in deferred revenues 111 (1,251 ) 886 8,005
2,377 (5,874 ) 18,762 3,363 Amortization of intangible assets 1,074
1,078 1,082 1,004 554 441 1,338 2,434 Non-cash warrant expense - -
427 - - - 1,126 66 Change in deferred platform commissions and
royalty expense (138 ) 419 (245 )
(1,753 ) (1,209 ) 1,527 (9,122 )
(108 )
Non-GAAP gross profit 17,116
15,943 14,919
31,290 32,546
24,131 49,824
46,561 GAAP operating expense
21,563 21,651 20,612 27,505
30,117 31,703 37,826 35,676 Stock-based
compensation (1,245 ) (736 ) (720 ) (1,584 ) (2,979 ) (4,566 )
(1,954 ) (2,134 ) Amortization of intangible assets (495 ) (495 )
(229 ) (117 ) (127 ) (127 ) (127 ) (127 ) Transitional costs - - -
- - (682 ) (493 ) (255 ) Change in fair value of Blammo earnout (29
) 47 31 (56 ) (304 ) (531 ) - - Restructuring charge (511 )
(937 ) - - -
(159 ) (209 ) (67 )
Non-GAAP operating
expense 19,283 19,530
19,694 25,748
26,707 25,638
35,043 33,093 GAAP
operating income/(loss) (5,494 ) (5,954
) (7,843 ) (3,471 ) 707
(3,666 ) (106 ) 5,130 Change in
deferred revenues 111 (1,251 ) 886 8,005 2,377 (5,874 ) 18,762
3,363 Non-GAAP cost of revenues adjustment 936 1,497 1,264 (749 )
(655 ) 1,968 (6,658 ) 2,392 Stock-based compensation 1,245 736 720
1,584 2,979 4,566 1,954 2,134 Amortization of intangible assets 495
495 229 117 127 127 127 127 Transitional costs - - - - - 682 493
255 Change in fair value of Blammo earnout 29 (47 ) (31 ) 56 304
531 - - Restructuring charge 511 937
- - - 159
209 67
Non-GAAP operating
income/(loss) (2,167 )
(3,587 ) (4,775 )
5,542 5,839 (1,507
) 14,781 13,468
GAAP net income/(loss) (5,497 )
(2,921 ) (7,968 ) (3,523
) 133 (3,768 ) 10,404
1,379 Change in deferred revenues 111 (1,251 ) 886 8,005
2,377 (5,874 ) 18,762 3,363 Non-GAAP cost of revenues adjustment
936 1,497 1,264 (749 ) (655 ) 1,968 (6,658 ) 2,392 Non-GAAP
operating expense adjustment 2,280 2,121 918 1,757 3,410 6,065
2,783 2,583 Foreign currency exchange loss/(gain) (129 ) (137 ) 159
130 136 31 347 981 Release of tax liabilities and valuation
allowance - (3,148 ) - -
- - (8,352 ) 1,531
Non-GAAP net income/(loss) $ (2,299
) $ (3,839 ) $ (4,741
) $ 5,620 $ 5,401
$ (1,578 ) $ 17,286
$ 12,229 Reconciliation of
net income/(loss) and net income/(loss) per share: GAAP net
income/(loss) per share - basic $ (0.08 ) $ (0.04 ) $ (0.11 ) $
(0.05 ) $ 0.00 $ (0.04 ) $ 0.11 $ 0.01 GAAP net income/(loss) per
share - diluted $ (0.08 ) $ (0.04 ) $ (0.11 ) $ (0.05 ) $ 0.00 $
(0.04 ) $ 0.10 $ 0.01 Non-GAAP net income/(loss) per share - basic
$ (0.03 ) $ (0.05 ) $ (0.07 ) $ 0.07 $ 0.07 $ (0.02 ) $ 0.18 $ 0.12
Non-GAAP net income/(loss) per share - diluted $ (0.03 )
$ (0.05 ) $ (0.07 ) $ 0.07 $ 0.06 $ (0.02 ) $ 0.16 $ 0.11 Shares
used in computing Non-GAAP basic net income/(loss) per share 66,397
69,812 71,529 78,071 79,719 85,549 98,628 103,406 Shares used in
computing Non-GAAP diluted net income/(loss) per share 66,397
69,812 71,529 81,433 85,398 85,549 105,438 106,954
Non-GAAP operating expense break-out: GAAP research and
development expense $ 11,630 $
11,224 $ 11,405 $ 12,618
$ 15,579 $ 17,297 $
15,355 $ 16,053 Transitional costs - - - - -
(20 ) - - Stock-based compensation (668 ) (163 )
(268 ) (849 ) (2,317 ) (3,605 )
(764 ) (736 )
Non-GAAP research and development
expense 10,962 11,061
11,137 11,769
13,262 13,672
14,591 15,317 GAAP
sales and marketing expense 5,008 5,143
5,361 10,608 9,485 7,989 15,327
12,275 Stock-based compensation (67 ) (93 )
(40 ) (103 ) (101 ) (190 ) (201
) (209 )
Non-GAAP sales and marketing expense
4,941 5,050 5,321
10,505 9,384
7,799 15,126
12,066 GAAP general & administrative
expense 3,919 3,852 3,617 4,162
4,926 6,131 6,808 7,154 Transitional
costs - - - - - (662 ) (493 ) (255 ) Change in fair value of Blammo
earnout (29 ) 47 31 (56 ) (304 ) (531 ) - - Stock-based
compensation (510 ) (480 ) (412 ) (632
) (561 ) (771 ) (989 ) (1,189 )
Non-GAAP general and administrative expense $
3,380 $ 3,419 $
3,236 $ 3,474 $
4,061 $ 4,167 $
5,326 $ 5,710
Glu Mobile
Inc. Non-GAAP Adjusted EBITDA (in thousands)
(unaudited)
For the Three Months Ended
March 31, June 30, September 30, December
31, March 31, June 30, September 30,
December 31, 2013 2013
2013 2013
2014 2014 2014
2014 GAAP net
income/(loss) $ (5,497 ) $
(2,921 ) $ (7,968 ) $
(3,523 ) $ 133 $ (3,768
) $ 10,404 $ 1,379 Change in
deferred revenues 111 (1,251 ) 886 8,005 2,377 (5,874 ) 18,762
3,363 Change in deferred platform commissions and royalty expense
(138 ) 419 (245 ) (1,753 ) (1,209 ) 1,527 (9,122 ) (108 ) Non-cash
warrant expense - - 427 - - - 1,126 66 Amortization of intangible
assets 1,569 1,573 1,311 1,121 681 568 1,465 2,561 Depreciation 731
661 633 682 620 607 617 669 Stock-based compensation 1,245 736 720
1,584 2,979 4,566 1,954 2,134 Change in fair value of Blammo
earnout 29 (47 ) (31 ) 56 304 531 - - Transitional costs - - - - -
682 493 255 Restructuring charge 511 937 - - - 159 209 67 Foreign
currency exchange loss/(gain) (129 ) (137 ) 159 130 136 31 347 981
Interest and other income (3 ) (26 ) (4 ) - (6 ) (7 ) (7 ) (3 )
Income tax provision/(benefit) 135 (2,870 )
(30 ) (78 ) 444 78
(10,850 ) 2,773
Total Non-GAAP Adjusted EBITDA
$ (1,436 ) $ (2,926 )
$ (4,142 ) $ 6,224
$ 6,459 $ (900 ) $
15,398 $ 14,137
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 Revenues and Deferred Cost of Revenues. 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 revenues and any associated
cost of revenues, including platform commissions and royalties, on
a straight-line basis over the estimated life of the paying user.
Internally, Glu’s management excludes the impact of the changes in
deferred revenue and deferred cost of revenues related to its
premium and free-to-play 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 revenues and deferred cost of
revenues 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 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.
Non-cash Warrant Expense. In the third and fourth quarters of
2013 and 2014, Glu recorded a non-cash charge related to the
vesting of warrants to purchase shares of common stock issued to
brand holders as part of third party licensing, development and
publishing arrangements. These charges were computed using the
Black-Scholes valuation model and were recorded in cost of
revenues. When evaluating the performance of its consolidated
results, Glu does not consider non-cash warrant expense as it
places a greater emphasis on overall stockholder dilution rather
than the accounting charges associated with the vesting of any
warrants. As the non-cash warrant expense impacts comparability
from period to period Glu believes that investors benefit from a
supplemental non-GAAP financial measure that excludes these
charges.
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 and second quarters of 2013 and the second, third and
fourth quarters of 2014 and recorded (1) non-cash restructuring
charges due to vacating a portion of its offices in Washington,
vacating its Brazil office and writing-off the cumulative
translation adjustment upon substantial liquidation of its
Brazilian entity; and (2) cash restructuring charges due to the
termination of certain employees in its Brazil, China, Europe and
U.S. offices. 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. Glu has
incurred various costs related to the acquisition and integration
of PlayFirst and Cie Games 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.
Release of tax liabilities and valuation allowance. In the
second quarter of 2013, Glu recorded a non-cash income tax benefit
related to the release of certain foreign income tax liabilities
upon the expiration of the statute of limitations. Additionally, in
the third and fourth quarters of 2014 Glu adjusted a portion of its
deferred tax asset valuation allowance as a result of the deferred
tax liabilities recorded in connection with the Cie Games
acquisition. Glu believes that these non-recurring, one-time tax
adjustments do not reflect its ongoing operations and that
investors benefit from a supplemental non-GAAP financial measure
that excludes these adjustments.
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 2013 and 2014 were as follows (in
thousands):
March 31, 2013 $ 129 June 30, 2013 137 September 30, 2013
(159 ) December 31, 2013 (130 )
FY 2013 $
(23 ) March 31, 2014 $ (136 ) June 30,
2014 (31 ) September 30, 2014 (347 ) December 31, 2014 (981
)
FY 2014 $ (1,495 )
Investor Relations:ICR, Inc.Seth Potter,
646-277-1230ir@glu.com
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