- Q4 non-GAAP revenue of $57.9 million
and Q4 GAAP revenue of $61.0 million
- Q4 Adjusted EBITDA of $2.8
million
- Announced exclusive partnerships
with Taylor Swift and Gordon Ramsay
- Approximately 1.3 billion total
social followers* of celebrities with whom the company has
exclusive partnerships; titles featuring these celebrities expected
live by end of 2017
- Investment in and option to acquire
Plain Vanilla Corp., developer of hit trivia game QuizUp
- Approved a stock repurchase program
to potentially repurchase up to $50 million of Glu’s common
stock
Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and
publisher of free-to-play games for smartphone and tablet devices,
today announced financial results for its fourth quarter and full
year ended December 31, 2015.
“Our ability to exceed revenue and EBITDA expectations in Q4 was
driven by the ongoing traction of our catalog titles, including the
continued solid performance of Kim Kardashian: Hollywood, Cooking
Dash 2016, Racing Rivals and Deer Hunter 2016,” stated Niccolo de
Masi, Chairman and Chief Executive Officer of Glu. “During the
quarter we hired new studio leadership, with Tim Wilson joining as
our Global CTO and Nick Earl as our President of Global Studios.
Nick and Tim have hit the ground running and have already begun
evolving our global studios. We anticipate that our global studio
improvements will significantly enhance Glu’s product delivery on a
go forward basis.”
de Masi continued, “I am pleased that Glu has extended our lead
in building the premier celebrity gaming platform via a multi-year,
exclusive gaming partnership with Taylor Swift. Swift is the most
followed woman in the world with over 220 million social followers
and a powerful addition to our celebrity gaming partnerships which
now total approximately 1.3 billion social followers*. The strength
of our catalog, new launch roadmap, and strong balance sheet,
positions Glu for growth in 2016 and beyond.”
Fourth Quarter 2015 Financial
Highlights:
- Revenue: Total GAAP revenue was
$61.0 million in the fourth quarter of 2015 compared to $72.9
million in the fourth quarter of 2014. Total non-GAAP revenue was
$57.9 million in the fourth quarter of 2015, compared to $76.2
million in the fourth quarter of 2014. Non-GAAP revenue excludes
changes in deferred revenue and litigation settlement
proceeds.
- Gross Margin: GAAP gross margin
was 58% in the fourth quarter of 2015 compared to 56% in the fourth
quarter of 2014. Non-GAAP gross margin was 63% in the fourth
quarter of 2015 compared to 61% in the fourth quarter of 2014.
Non-GAAP gross margin excludes changes in deferred revenue and
litigation settlement proceeds, change in deferred cost of revenue,
amortization of intangible assets and non-cash warrant
expense.
- GAAP Operating Income/(Loss):
GAAP operating loss was $(3.1) million in the fourth quarter of
2015 compared to income of $5.1 million in the fourth quarter of
2014.
- Non-GAAP Operating Income:
Non-GAAP operating income was $2.1 million in the fourth quarter of
2015 compared to $13.5 million during the fourth quarter of 2014.
Non-GAAP operating income excludes changes in deferred revenue and
deferred cost of revenue, amortization of intangible assets,
non-cash warrant expense, stock-based compensation expense,
restructuring charges, change in fair value of the Blammo earnout,
transitional costs and litigation costs and settlement
proceeds.
- Adjusted EBITDA: Adjusted EBITDA
was $2.8 million for the fourth quarter of 2015, compared to $14.1
million during the fourth quarter of 2014. Adjusted EBITDA is
defined as non-GAAP operating income excluding depreciation.
- GAAP Net Income/(Loss) and EPS:
GAAP net loss was $(3.0) million for the fourth quarter of 2015
compared to net income of $1.4 million for the fourth quarter of
2014. GAAP EPS loss was $(0.02) for the fourth quarter of 2015,
based on 127.8 million weighted-average basic shares outstanding,
compared to a GAAP diluted EPS of $0.01 for the fourth quarter of
2014, based on 107.0 million diluted weighted-average shares
outstanding.
- Non-GAAP Net Income and EPS:
Non-GAAP net income was $2.3 million for the fourth quarter of 2015
compared to $12.2 million for the fourth quarter of 2014. Non-GAAP
diluted EPS was $0.02 for the fourth quarter of 2015 based on 129.4
million weighted-average diluted shares outstanding, compared to
non-GAAP diluted EPS of $0.11 for the fourth quarter of 2014 based
on 107.0 million weighted-average diluted shares outstanding.
- Cash and Cash Flows: As of
December 31, 2015, Glu had cash and cash equivalents of $180.5
million compared to $182.3 million at the end of the prior quarter.
The company continues to have no debt. Cash flows generated from
operations were $139,000 for the fourth quarter of 2015 compared to
$19.3 million for the fourth quarter of 2014.
A reconciliation of GAAP to non-GAAP results has been provided
in the financial statement tables included in this press release.
An explanation of these measures is also included below under the
heading “Use of Non-GAAP Financial Measures.”
Recent Developments and Strategic
Initiatives:
- Today, we announced a multi-year,
exclusive mobile gaming partnership with Taylor Swift, an
award-winning singer, musician and song writer.
- In January 2016, we announced the
exclusive partnership with award-winning chef Gordon Ramsay on the
development of a new mobile game that is currently slated for
global release during the summer of 2016.
- In January 2016, we announced an
investment in QuizUp developer Plain Vanilla Corp. We also have a
call option to acquire Plain Vanilla Corp. for 15 months from the
closing of the initial investment at a pre-agreed price.
- In January 2016, we acquired a minority
equity stake and entered into a publishing agreement with Dairy
Free Games.
In addition, our Board of Directors has formally approved a
stock repurchase program under which we may repurchase up to $50
million of our outstanding common stock. We currently intend to
enter into a Rule 10b5-1 trading plan in order to facilitate this
program, under which we may repurchase shares without suspension
for trading blackout periods. The repurchase program may be
suspended, discontinued or modified in compliance with applicable
securities laws.
“Our solid fourth quarter results were highlighted by our
ability to exceed our revenue expectations,” stated Eric R. Ludwig,
Chief Operating Officer and Chief Financial Officer. “Glu remains
committed to enhancing the long-term value of the company through
the ongoing investment in internal and external opportunities
supported by our strong balance sheet.”
Fiscal 2015 Financial
Highlights:
- Revenues: Total GAAP revenues
were $249.9 million for the year ended December 31, 2015 compared
to $223.1 million for the year ended December 31, 2014. Total
non-GAAP revenues were $242.2 million for the year ended December
31, 2015 compared to $241.8 million for the year ended December 31,
2014.
- Gross Margin: GAAP gross margin
was 57% for the year ended December 31, 2015 compared to 62% for
the year ended December 31, 2014. Non-GAAP gross margin was 62% for
the year ended December 31, 2015 compared to 63% for the year ended
December 31, 2014.
- GAAP Operating Income/(Loss):
GAAP operating loss was $(6.3) million for the year ended December
31, 2015 compared to operating income of $2.1 million for the year
ended December 31, 2014.
- Non-GAAP Operating Income:
Non-GAAP operating income was $13.9 million for the year ended
December 31, 2015 compared to $32.6 million for the year ended
December 31, 2014.
- Adjusted EBITDA: Adjusted EBITDA
was $16.8 million for the year ended December 31, 2015 compared to
$35.1 million for the year ended December 31, 2014.
- GAAP Net Income/(Loss) and EPS:
GAAP net loss was $(7.2) million for the year ended December 31,
2015 compared to net income of $8.1 million for the year ended
December 31, 2014. GAAP EPS loss was $(0.06) for the year ended
December 31, 2015, based on 118.8 million weighted-average basic
shares outstanding, compared to $0.08 for the year ended December
31, 2014, based on 96.9 million weighted-average diluted shares
outstanding.
- Non-GAAP Net Income and EPS:
Non-GAAP net income was $13.8 million for the year ended December
31, 2015 compared to $33.3 million for the year ended December 31,
2014. Non-GAAP EPS was $0.11 for the year ended December 31, 2015
based on 122.8 million weighted-average diluted shares outstanding,
compared $0.34 for the year ended December 31, 2014 based on 96.9
million weighted-average diluted shares outstanding.
- Cash Flows Generated/(Used) from
Operations: Cash flows used in operations were $(14.0) million
for the year ended December 31, 2015 compared to cash flows
generated from operations of $30.6 million for the year ended
December 31, 2014.
A reconciliation of GAAP to non-GAAP results has been provided
in the financial statement tables included in this press release.
An explanation of these measures is also included below under the
heading “Non-GAAP Financial Measures.”
Business Outlook as of February 3, 2016:
The following forward-looking statements reflect expectations as
of February 3, 2016. Results may be materially different and are
affected by many factors, such as: consumer demand for mobile
entertainment and specifically Glu’s products; consumer demand for
smartphones, tablets and next-generation platforms; our ability to
improve the monetization of our titles and continue to successfully
launch and update new games; development delays on Glu's products;
continued uncertainty in the global economic environment;
competition in the industry; storefront featuring; changes in
foreign exchange rates; Glu's effective tax rate and other factors
detailed in this release and in Glu's SEC filings.
First Quarter Expectations – Quarter Ending March 31,
2016:
- Non-GAAP revenue is expected to be
between $46.0 million and $48.0 million.
- Non-GAAP gross margin is expected to be
approximately 59.9%.
- Non-GAAP operating expenses are
expected to be between $35.2 million and $35.4 million.
- Adjusted EBITDA, defined as non-GAAP
operating income/(loss) excluding depreciation of approximately
$0.6 million, is expected to range from a loss of $(6.0) million to
$(7.0) million.
- Income tax is expected to be an expense
of approximately $0.2 million.
- Non-GAAP net income/(loss) is expected
to be between $(6.8) million and $(7.8) million, or between $(0.05)
and $(0.06) per weighted-average basic share outstanding, which
excludes approximately $4.1 million of anticipated stock-based
compensation expense and $2.4 million for amortization of
intangibles.
- Weighted-average common shares
outstanding are expected to be approximately 129.5 million basic
and 129.9 million diluted.
2016 Expectations – Full Year Ending December 31,
2016:
- Non-GAAP revenue is expected to be
between $250.0 million and $275.0 million.
- Non-GAAP gross margin is expected to be
approximately 56.2%.
- Adjusted EBITDA is expected to range
from a loss of $(7.0) million to $(15.0) million.
- Non-GAAP net income/(loss) is expected
to be between a loss of $(10.3) million and $(18.3) million, or
between $(0.08) and $(0.14) per weighted-average basic share
outstanding, which excludes approximately $17.7 million of
anticipated stock-based compensation expense and $9.2 million for
amortization of intangibles.
- Weighted-average common shares
outstanding are expected to be approximately 132.2 million basic
and 134.7 million diluted.
- We expect to have cash and short-term
investments at December 31, 2016 of at least $140.0 million with no
debt.
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 # 22306718 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 3, 2016, and 8:59 p.m. Pacific
Time, February 10, 2016, by calling (855) 859-2056, or (404)
537-3406, with conference ID # 22306718.
Disclosure Using Social Media Channels and Calculation of
Social Followers
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.
*Glu calculates the aggregate number of social followers of a
particular celebrity licensor by adding the total followers on
Facebook, Twitter, Instagram, Vevo and Vine for such celebrity.
There is fan overlap among these social channels and among Glu’s
various celebrity licensors, and such aggregate numbers have not
been deduplicated.
The approximately 1.3 billion total social followers supporting
celebrity titles that Glu expects to be live by the end of 2017 is
based on the combined Facebook, Twitter, Instagram, Vevo, and Vine
audiences of Taylor Swift, Gordon Ramsay, Katy Perry, Kim
Kardashian West, Kendall and Kylie Jenner, Britney Spears, Nicki
Minaj, Jason Statham and additional yet-to-be announced celebrities
as of February 3, 2016.
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 revenue, non-GAAP smartphone revenue, non-GAAP
cost of revenue, 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 revenue and deferred
cost of revenue;
- Amortization of intangible assets;
- Non-cash warrant expense;
- Stock-based compensation expense;
- Restructuring charges;
- Change in fair value of Blammo
earnout;
- Litigation settlement proceeds and
costs;
- 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 3, 2016”
(“First Quarter Expectations – Quarter Ending March 31, 2016” and
“2016 Expectations – Full Year Ending December 31, 2016”), and the
statements regarding that we have exclusive partnerships with
celebrities with approximately 1.3 billion social followers and
expect games featuring these celebrities to be live by the end of
2017; that we anticipate that our global studio improvements will
significantly enhance our ability to deliver product quality on a
go forward basis; that we extended our lead in building the premier
celebrity gaming platform via a multi-year exclusive gaming
partnership with a new celebrity partner that is a powerful
addition to our celebrity gaming partnerships; that the strength of
our catalog, new launch roadmap, and strong balance sheet,
positions us for growth in 2016 and beyond; the expected launch
date of the game we are developing featuring Gordon Ramsay; our
intention to implement a stock repurchase program and to enter into
a Rule 10b5-1 trading plan as part of such efforts; and that we
remain committed to enhancing the long-term value of the company
through the ongoing investment in internal and external
opportunities supported by our strong balance sheet. 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 3, 2016"; the
risk that our global studio improvements will not improve our
ability to deliver to date and quality; the risk that Glu does not
realize the anticipated strategic benefits from our celebrity
partnerships, including our partnerships with our newly announced
celebrity partners; the risk that the number of social followers of
our celebrity partners does not correlate to strong performance for
our celebrity titles; 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; the risk
that the timing and amount of any shares repurchased by the company
in its stock repurchase program will be determined by Glu’s
management based on its evaluation of market conditions and other
factors and, as a result, the company may determine to repurchase a
smaller amount of shares than anticipated, or none at all; and
other risks detailed under the caption "Risk Factors" in our Form
10-Q filed with the Securities and Exchange Commission on November
9, 2015 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, COOKING DASH, DEER HUNTER, DINER DASH, DINO
HUNTER: DEADLY SHORES, ETERNITY WARRIORS, FRONTLINE COMMANDO,
RACING RIVALS, TAP SPORTS BASEBALL, and TAP SPORTS FOOTBALL, and
branded IP games including KIM KARDASHIAN: HOLLYWOOD, KATY PERRY
POP, JAMES BOND: WORLD OF ESPIONAGE, MISSION IMPOSSIBLE: ROGUE
NATION and SNIPER X WITH JASON STATHAM on the App Store, Google
Play, Amazon Appstore, 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, COOKING DASH, DEER HUNTER, DINER DASH, DINO
HUNTER: DEADLY SHORES, ETERNITY WARRIORS, FRONTLINE COMMANDO,
RACING RIVALS, TAP SPORTS BASEBALL, TAP SPORTS FOOTBALL, SNIPER X,
GLU, GLU MOBILE, and the 'g' character logo are trademarks of Glu
Mobile Inc.
Glu Mobile Inc. Consolidated Balance
Sheets (in thousands) (unaudited) December
31, December 31, 2015 2014
ASSETS Cash and cash equivalents $ 180,542 $ 70,912 Accounts
receivable, net 17,956 32,231 Prepaid royalties 28,715 864 Prepaid
expenses and other current assets 14,657
17,388
Total current assets 241,870 121,395
Property and equipment, net 5,447 6,116 Restricted cash 1,498 1,990
Long-term prepaid royalties 46,944 5,870 Other long-term assets
1,386 804 Intangible assets, net 17,767 27,524 Goodwill
87,890 87,964
Total assets $ 402,802
$ 251,663
LIABILITIES AND STOCKHOLDERS'
EQUITY Accounts payable $ 9,145 $ 11,685 Accrued liabilities
1,654 3,812 Accrued compensation 7,100 10,751 Accrued royalties
21,032 12,440 Accrued restructuring 342 - Deferred revenue
31,112 37,333
Total current liabilities
70,385 76,021 Long-term accrued royalties 24,347 870 Other
long-term liabilities 1,642 3,066
Total liabilities 96,374 79,957
Common stock 13 11 Additional paid-in capital 557,748
415,766 Accumulated other comprehensive loss (85 ) (8 ) Accumulated
deficit (251,248 ) (244,063 )
Stockholders'
equity 306,428 171,706
Total
liabilities and stockholders' equity $ 402,802 $ 251,663
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,
2015 2014 2015 2014
Revenue $ 61,030 $ 72,865
$ 249,900 $ 223,146 Cost of
revenue: Platform commissions, royalties and other 23,109
29,625 98,184 80,992 Amortization of intangible assets 2,325
2,434 9,553 4,767
Total cost of revenue 25,434
32,059 107,737
85,759 Gross profit 35,596
40,806 142,163
137,387 Operating expenses:
Research and development 20,001 16,053 72,856 64,284 Sales and
marketing 10,729 12,275 48,240 45,076 General and administrative
6,838 7,154 26,092 25,019 Amortization of intangible assets 11 127
201 508 Restructuring charge 1,075 67
1,075 435
Total operating
expenses 38,654 35,676
148,464 135,322
Income/(loss) from operations (3,058 )
5,130 (6,301 ) 2,065 Interest
income and other expense, net: Interest income 15 10 49 30
Other expense (149 ) (988 ) (792 )
(1,502 ) Interest income and other expense, net
(134
) (978 ) (743 )
(1,472 ) Income/(loss) before income
taxes (3,192 ) 4,152 (7,044
) 593 Income tax benefit/(provision) 234
(2,773 ) (141 ) 7,555
Net
income/(loss) $ (2,958 ) $
1,379 $ (7,185 ) $ 8,148
Net income/(loss) per share: Basic
$
(0.02 ) $ 0.01 $ (0.06
) $ 0.09 Diluted
$ (0.02
) $ 0.01 $ (0.06 )
$ 0.08 Weighted average common shares
outstanding Basic
127,775 103,406 118,775
91,826 Diluted
127,775 106,954 118,775
96,922 Stock-based compensation expense included
in: Research and development $ 1,099 $ 736 $ 3,563 $ 7,422
Sales and marketing 305 209 1,082 701 General and administrative
2,065 1,189 7,041
3,510
Total stock-based compensation expense $ 3,469
$ 2,134 $ 11,686 $ 11,633
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, 2014 2014
2014 2014 2015 2015 2015
2015 GAAP revenue $ 44,580
$ 40,910 $ 64,791 $
72,865 $ 69,470 $ 56,150
$ 63,250 $ 61,030 Change in deferred
revenue and litigation settlement proceeds 2,377
(5,874 ) 18,762 3,363
(7,023 ) 1,329 1,174 (3,135 )
Non-GAAP revenue 46,957
35,036 83,553
76,228 62,447
57,479 64,424
57,895 GAAP gross profit 30,824
28,037 37,720 40,806 40,726
32,396 33,445 35,596 Change in deferred
revenue and litigation settlement proceeds 2,377 (5,874 ) 18,762
3,363 (7,023 ) 1,329 1,174 (3,135 ) Amortization of intangible
assets 554 441 1,338 2,434 2,434 2,434 2,360 2,325 Non-cash warrant
expense - - 1,126 66 93 135 1,896 (116 ) Change in deferred
platform commissions and royalty expense (1,209 )
1,527 (9,122 ) (108 ) 2,819
(321 ) (780 ) 1,497
Non-GAAP gross
profit 32,546 24,131
49,824 46,561
39,049 35,973
38,095 36,167 GAAP
operating expense 30,117 31,703 37,826
35,676 38,214 38,540 33,056
38,654 Stock-based compensation (2,979 ) (4,566 ) (1,954 )
(2,134 ) (2,129 ) (3,032 ) (3,056 ) (3,469 ) Amortization of
intangible assets (127 ) (127 ) (127 ) (127 ) (127 ) (32 ) (31 )
(11 ) Litigation costs and settlement proceeds - - - - - (476 ) 390
- Transitional costs - (682 ) (493 ) (255 ) (72 ) - - - Change in
fair value of Blammo earnout (304 ) (531 ) - - - - - -
Restructuring charge - (159 ) (209 )
(67 ) - - -
(1,075 )
Non-GAAP operating expense 26,707
25,638 35,043
33,093 35,886
35,000 30,359
34,099 GAAP operating income/(loss)
707 (3,666 ) (106 ) 5,130
2,512 (6,144 ) 389 (3,058
) Change in deferred revenue and litigation settlement
proceeds 2,377 (5,874 ) 18,762 3,363 (7,023 ) 1,329 1,174 (3,135 )
Non-GAAP cost of revenue adjustment (655 ) 1,968 (6,658 ) 2,392
5,346 2,248 3,476 3,706 Stock-based compensation 2,979 4,566 1,954
2,134 2,129 3,032 3,056 3,469 Amortization of intangible assets 127
127 127 127 127 32 31 11 Transitional costs - 682 493 255 72 - - -
Change in fair value of Blammo earnout 304 531 - - - - - -
Litigation costs and settlement proceeds - - - - - 476 (390 ) -
Restructuring charge - 159 209
67 - - -
1,075
Non-GAAP operating income/(loss)
5,839 (1,507 )
14,781 13,468
3,163 973 7,736
2,068 GAAP net
income/(loss) 133 (3,768 ) 10,404
1,379 1,124 (5,509 ) 158
(2,958 ) Change in deferred revenue and litigation
settlement proceeds 2,377 (5,874 ) 18,762 3,363 (7,023 ) 1,329
1,174 (3,135 ) Non-GAAP cost of revenue adjustment (655 ) 1,968
(6,658 ) 2,392 5,346 2,248 3,476 3,706 Non-GAAP operating expense
adjustment 3,410 6,065 2,783 2,583 2,328 3,540 2,697 4,555 Foreign
currency exchange loss 136 31 347 981 290 186 167 149 Release of
tax liabilities and valuation allowance - -
(8,352 ) 1,531 - -
- -
Non-GAAP net
income/(loss) $ 5,401 $
(1,578 ) $ 17,286 $
12,229 $ 2,065 $
1,794 $ 7,672 $
2,317 Reconciliation of net income/(loss)
and net income/(loss) per share: GAAP net income/(loss) per
share - basic $ 0.00 $ (0.04 ) $ 0.11 $ 0.01 $ 0.01 $ (0.05 ) $
0.00 $ (0.02 ) GAAP net income/(loss) per share - diluted $ 0.00 $
(0.04 ) $ 0.10 $ 0.01 $ 0.01 $ (0.05 ) $ 0.00 $ (0.02 ) Non-GAAP
net income/(loss) per share - basic $ 0.07 $ (0.02 ) $ 0.18 $ 0.12
$ 0.02 $ 0.02 $ 0.06 $ 0.02 Non-GAAP net income/(loss) per share -
diluted $ 0.06 $ (0.02 ) $ 0.16 $ 0.11 $ 0.02 $ 0.01 $ 0.06 $ 0.02
Shares used in computing Non-GAAP basic net income/(loss) per share
79,719 85,549 98,628 103,406 103,869 116,169 127,287 127,775 Shares
used in computing Non-GAAP diluted net income/(loss) per share
85,398 85,549 105,438 106,954 107,851 122,538 131,486 129,381
Non-GAAP operating expense break-out: GAAP
research and development expense $ 15,579
$ 17,297 $ 15,355 $
16,053 $ 18,243 $ 18,308
$ 16,304 $ 20,001 Transitional costs -
(20 ) - - - - - - Stock-based compensation (2,317 )
(3,605 ) (764 ) (736 ) (760 ) (836 )
(868 ) (1,099 )
Non-GAAP research and development
expense 13,262 13,672
14,591 15,317
17,483 17,472
15,436 18,902 GAAP
sales and marketing expense 9,485 7,989
15,327 12,275 12,438 12,771
12,302 10,729 Stock-based compensation (101 )
(190 ) (201 ) (209 ) (218 ) (282
) (277 ) (305 )
Non-GAAP sales and marketing
expense 9,384 7,799
15,126 12,066
12,220 12,489
12,025 10,424 GAAP
general & administrative expense 4,926 6,131
6,808 7,154 7,406 7,429 4,419
6,838 Transitional costs - (662 ) (493 ) (255 ) (72 ) - - -
Change in fair value of Blammo earnout (304 ) (531 ) - - - - - -
Stock-based compensation (561 ) (771 ) (989 ) (1,189 ) (1,151 )
(1,914 ) (1,911 ) (2,065 ) Litigation costs -
- - - -
(476 ) 390 -
Non-GAAP general and
administrative expense $ 4,061 $
4,167 $ 5,326 $
5,710 $ 6,183 $
5,039 $ 2,898 $
4,773
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, 2014 2014 2014 2014
2015 2015 2015 2015
GAAP net income/(loss) $ 133 $
(3,768 ) $ 10,404 $ 1,379
$ 1,124 $ (5,509 ) $
158 $ (2,958 ) Change in deferred
revenue and litigation settlement proceeds 2,377 (5,874 ) 18,762
3,363 (7,023 ) 1,329 1,174 (3,135 ) Change in deferred platform
commissions and royalty expense (1,209 ) 1,527 (9,122 ) (108 )
2,819 (321 ) (780 ) 1,497 Non-cash warrant expense - - 1,126 66 93
135 1,896 (116 ) Amortization of intangible assets 681 568 1,465
2,561 2,561 2,466 2,391 2,336 Depreciation 620 607 617 669 706 732
718 706 Stock-based compensation 2,979 4,566 1,954 2,134 2,129
3,032 3,056 3,469 Change in fair value of Blammo earnout 304 531 -
- - - - - Transitional costs - 682 493 255 72 - - - Litigation
costs and settlement proceeds - - - - - 476 (390 ) - Restructuring
charge - 159 209 67 - - - 1,075 Foreign currency exchange loss 136
31 347 981 290 186 167 149 Interest income and other expense (6 )
(7 ) (7 ) (3 ) (6 ) (12 ) (15 ) (15 ) Income tax
provision/(benefit) 444 78
(10,850 ) 2,773 1,104 (809 )
79 (234 )
Total Non-GAAP Adjusted
EBITDA $ 6,459 $ (900
) $ 15,398 $ 14,137
$ 3,869 $ 1,705
$ 8,454 $ 2,774
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 Deferred Cost of Revenue. 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
cost of revenue, 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 revenue 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 revenue and deferred cost of
revenue from its operating results is important to facilitate
comparisons to prior periods 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
2014 and the full year of 2015, 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 fourth party licensing,
development and publishing arrangements. These charges were
computed using the Black-Scholes valuation model and were recorded
in cost of revenue. 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. The Company applies the fair
value provisions of ASC 718, Compensation-Stock Compensation (“ASC
718”). ASC 718 requires the recognition of compensation expense,
using a fair-value based method, for costs related to all
share-based payments. Included in the stock compensation expense
was the contingent consideration that was subsequently issued to
the Blammo employees who were former shareholders of Blammo, which
was recorded as research and development expense over the term of
the earn-out periods, since these employees were primarily employed
in product development. Glu re-measured the fair value of the
contingent consideration each reporting period and only recorded a
compensation expense for the portion of the earn-out target which
was achieved. 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 second, third and fourth quarters of 2014 and the fourth
quarter of 2015 and recorded cash restructuring charges due to the
termination of certain employees in its 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 were
achieved. Glu recorded the estimated contingent consideration
liability at acquisition and adjusted 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.
Litigation Settlement Proceeds and Costs. These proceeds and
expenses consist primarily of one-time settlement payments received
from, and legal fees incurred in connection with, intellectual
property infringement matters. The Company has treated the
settlement proceeds as a multiple element arrangement and has
allocated a significant portion of the proceeds to revenue as
deemed royalty revenue for the settlement of past infringement. The
residual proceeds have been allocated to contra general and
administrative expenses and offset legal fees incurred. The Company
excludes these proceeds and costs from its non-GAAP measures as
these proceeds and costs are isolated, unpredictable and not
expected to recur regularly, and the Company believes that these
non-recurring proceeds and costs have no direct correlation to the
operation of the Company’s ongoing core business.
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 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 excludes 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 losses recognized during 2014 and 2015 were as
follows (in thousands):
March 31, 2014 $ (136) June 30, 2014 (31) September 30, 2014
(347) December 31, 2014 (981)
FY 2014 $
(1,495) March 31, 2015 $ (290) June 30, 2015
(186) September 30, 2015 (167) December 31, 2015 (149)
FY
2015 $ (792)
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160203006519/en/
Investor Relations:ICR, Inc.Seth Potter,
646-277-1230ir@glu.com
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