- Fourth quarter revenue up 25% year over year to $141.4 million;
bookings grow 15% year over year to $124.8 million
- Full year 2020 revenue up 31% to $540.5 million; bookings reach
record $560.6 million, up 32% year over year
- Fourth quarter record GAAP net income of $23.9 million; $20.4
million for the full year
- Fourth quarter GAAP diluted earnings per share of $0.13; $0.12
for the full year
- Fourth quarter free cash flow of $46.2 million; full year 2020
free cash flow of $69.0 million up 132% year over year
Glu Mobile Inc. (NASDAQ: GLUU), a leading global developer and
publisher of mobile games, today announced financial results for
its fourth quarter and full year ended December 31, 2020.
“Our fourth quarter results capped off another strong year for
Glu,” said Nick Earl, Chief Executive Officer. “The performance of
our Growth Games and the resurgence of Kim Kardashian: Hollywood
coupled with a strong contribution from the title we launched
during the year, Disney Sorcerer’s Arena, drove a 32% year over
year increase in bookings in 2020. The operating initiatives we put
in place to improve productivity and scale our business took hold
in the second half of 2020 resulting in a significant increase in
profitability and increased margin expansion.”
Fourth Quarter 2020 Financial
Highlights:
Three Months Ended in millions, except per share data December 31,
2020 December 31, 2019 Revenue
$141.4
$112.9
Gross margin
65.5%
65.2%
Net income
$23.9
$10.8
Net income per share – basic
$0.14
$0.07
Net income per share – diluted
$0.13
$0.07
Weighted-average common shares outstanding – basic
172.4
147.2
Weighted-average common shares outstanding – diluted
184.6
155.8
Cash generated from operations excluding royalty advances
47.6
$25.4
Cash paid for royalty advances that are included in cash generated
from operations
(0.8)
($0.4)
Cash and cash equivalents
$364.4
$127.1
Additional Financial Information Three Months Ended Guidance
provided for three monthsended December 31, 2020 December 31, 2020
December 31, 2019 Low High Bookings
$124.8
$108.4
$119.5
$124.5
Platform commissions, excluding any impact of deferred platform
commissions *
$32.4
$28.7
$32.3
$36.6
Royalties, excluding any impact of deferred royalties*
$8.0
$5.9
$7.6
$8.0
Hosting costs
$1.8
$1.9
$1.7
$1.8
User acquisition and marketing expenses
$19.1
$24.7
$19.0
$19.0
Adjusted other operating expenses*
$37.7
$33.4
$38.4
$38.6
Depreciation
$1.3
$1.0
$1.5
$1.5
* Platform commissions, excluding any impact of deferred platform
commissions, Royalties, excluding any impact of deferred royalties,
and Adjusted other operating expenses are non-GAAP financial
measures. These non-GAAP financial items should be considered in
addition to, but not as a substitute for, the information provided
in accordance with GAAP. Reconciliations for these non-GAAP
financial items to the most directly comparable financial items
based on GAAP are provided in GAAP to Adjusted results
reconciliation table.
Full Year 2020 Financial
Highlights:
Twelve Months Ended in millions, except per share data December 31,
2020 December 31, 2019 Revenue
$540.5
$411.4
Gross margin
64.6%
64.6%
Net income
$20.4
$8.9
Net income per share – basic
$0.13
$0.06
Net income per share – diluted
$0.12
$0.06
Weighted-average common shares outstanding – basic
162.5
145.8
Weighted-average common shares outstanding – diluted
173.2
157.4
Cash generated from operations excluding royalty advances
$97.6
$39.3
Cash paid for royalty advances that are included in cash generated
from operations
($21.5)
($4.1)
Cash and cash equivalents
$364.4
$127.1
Additional Financial Information Twelve Months Ended
December 31, 2020 December 31, 2019 Bookings
$560.6
$423.3
Platform commissions, excluding any impact of deferred platform
commissions *
$150.2
$111.5
Royalties, excluding any impact of deferred royalties*
$38.3
$26.4
Hosting costs
$7.6
$7.2
User acquisition and marketing expenses
$146.2
$118.0
Adjusted other operating expenses*
$147.3
$122.6
Depreciation
$5.4
$4.1
* Platform commissions, excluding any impact of deferred platform
commissions, Royalties, excluding any impact of deferred royalties,
and Adjusted other operating expenses are non-GAAP financial
measures. These non-GAAP financial items should be considered in
addition to, but not as a substitute for, the information provided
in accordance with GAAP. Reconciliations for these non-GAAP
financial items to the most directly comparable financial items
based on GAAP are provided in GAAP to Adjusted results
reconciliation table.
“Our financial results reflect the tremendous progress we made
throughout the year in effectively scaling our business to increase
profitability and meaningfully expand our adjusted EBITDA margin,”
said Eric R. Ludwig, Chief Operating Officer and Chief Financial
Officer. “We reached a milestone with record profitability and
operating margin on a GAAP basis for the fourth quarter and full
year 2020. Our key operating metrics – player conversion,
engagement and monetization reflect the initiatives we have put in
place to optimize our user acquisition and marketing spend. Our
debt-free balance sheet remains in excellent shape with $364
million in cash.”
Management Conference Call
As a result of the proposed acquisition of Glu by Electronic
Arts, which was separately announced today, Glu’s quarterly results
conference call previously scheduled for February 9, 2021 at 2:00
p.m. Pacific Time (5:00 p.m. Eastern Time) has been cancelled.
Disclosure Using Social Media Channels
Glu currently announces material information to its investors
using SEC filings, press releases, public conference calls and
webcasts. Glu uses these channels as well as social media channels
to announce information about the company, games, employees and
other issues. Given SEC guidance regarding the use of social media
channels to announce material information to investors, Glu is
notifying investors, the media, its players and others interested
in the company that in the future, it might choose to communicate
material information via social media channels or, it is possible
that information it discloses through social media channels may be
deemed to be material. Therefore, Glu encourages investors, the
media, players and others interested in Glu to review the
information posted on the company forum
(http://ggnbb.glu.com/forum.php) and the company Facebook site
(https://www.facebook.com/glumobile) and the company twitter
account (https://twitter.com/glumobile). Investors, the media,
players or other interested parties can subscribe to the company
blog and twitter feed at the addresses listed above. Any updates to
the list of social media channels Glu will use to announce material
information will be posted on the Investor Relations page of the
company's website at www.glu.com/investors.
Use of Non-GAAP Financial Measures
To supplement Glu's unaudited condensed consolidated financial
data presented in accordance with GAAP, Glu uses certain non-GAAP
measures of financial performance. The presentation of these
non-GAAP financial measures is not intended to be considered in
isolation from, as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP, and may
be different from non-GAAP financial measures used by other
companies. In addition, these non-GAAP measures have limitations in
that they do not reflect all of the amounts associated with Glu's
results of operations as determined in accordance with GAAP. The
non-GAAP financial measures used by Glu include historical and
estimated bookings, platform commissions, excluding any impact of
deferred platform commissions, royalties, excluding any impact of
deferred royalties, and adjusted operating expenses. These non-GAAP
financial measures exclude the following items from Glu's unaudited
consolidated statements of operations:
- Change in deferred platform commissions;
- Change in deferred royalties;
- Amortization of intangible assets;
- Stock-based compensation expense;
- Transitional costs;
- Litigation costs; and
- Restructuring costs
Bookings do not reflect the deferral of certain game revenue
that Glu recognizes over the estimated useful lives of paying users
of Glu’s games and excludes changes in deferred revenue.
Glu may consider whether significant items that arise in the
future should also be excluded in calculating the non-GAAP
financial measures it uses.
Glu believes that these non-GAAP financial measures, when taken
together with the corresponding GAAP financial measures, provide
meaningful supplemental information regarding Glu's performance by
excluding certain items that may not be indicative of Glu's core
business, operating results or future outlook. Glu's management
uses, and believes that investors benefit from referring to, these
non-GAAP financial measures in assessing Glu's operating results,
as well as when planning, forecasting and analyzing future periods.
These non-GAAP financial measures also facilitate comparisons of
Glu's performance to prior periods.
About Glu Mobile
Glu Mobile (NASDAQ: GLUU) is a leading developer and publisher
of mobile games. Founded in 2001, Glu is headquartered in San
Francisco with additional locations in Foster City, Orlando,
Toronto and Hyderabad. With a history spanning over a decade, Glu’s
culture is rooted in taking smart risks and fostering creativity to
deliver world-class interactive experiences for our players. Glu’s
diverse portfolio features top-grossing and award-winning original
and licensed IP titles including, Covet Fashion, Deer Hunter,
Design Home, Diner DASH Adventures, Disney Sorcerer’s Arena, Kim
Kardashian: Hollywood and MLB Tap Sports Baseball available
worldwide on various platforms including the App Store and Google
Play. For more information, visit www.glu.com or follow Glu on
Twitter, Facebook and Instagram.
Covet Fashion, Deer Hunter, Design Home, Diner DASH, Table &
Taste, Tap Sports, Glu and Glu Mobile are trademarks of Glu Mobile
Inc.
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,
2020
2019
2020
2019
Revenue
$
141,401
$
112,879
$
540,522
$
411,381
Cost of revenue: Platform commissions, royalties and
other
48,204
38,278
188,295
141,112
Amortization of intangible assets
595
1,039
3,258
4,387
Total cost of revenue
48,799
39,317
191,553
145,499
Gross profit
92,602
73,562
348,969
265,882
Operating expenses: Research and development
30,989
25,877
119,718
95,127
Sales and marketing
27,077
31,013
177,245
140,298
General and administrative
9,688
5,751
31,491
23,216
Total operating expenses
67,754
62,641
328,454
258,641
Income from operations
24,848
10,921
20,515
7,241
Interest and other income, net:
289
510
1,071
2,101
Income before income taxes
25,137
11,431
21,586
9,342
Income tax provision
(1,256
)
(641
)
(1,139
)
(471
)
Net income
$
23,881
$
10,790
$
20,447
$
8,871
Net income per common share - basic
$
0.14
$
0.07
$
0.13
$
0.06
Net income per common share - diluted
$
0.13
$
0.07
$
0.12
$
0.06
Weighted average common shares outstanding - basic
172,407
147,211
162,521
145,838
Weighted average common shares outstanding - diluted
184,630
155,770
173,167
157,383
Glu Mobile Inc. Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
December 31,
December 31,
2020
2019
ASSETS Cash and cash equivalents
$
364,396
$
127,053
Accounts receivable, net
34,571
29,304
Prepaid royalties
12,831
15,347
Deferred royalties
6,924
5,067
Deferred platform commission fees
35,279
29,239
Prepaid expenses and other assets
9,071
8,629
Total current assets
463,072
214,639
Property and equipment, net
15,654
17,643
Operating lease right of use assets
31,461
35,170
Long-term prepaid royalties
20,626
26,879
Other long-term assets
5,315
2,733
Intangible assets, net
1,500
4,758
Goodwill
116,227
116,227
Total assets
$
653,855
$
418,049
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable
and accrued liabilities
$
15,318
17,535
Accrued compensation
27,246
11,260
Accrued royalties
15,773
20,802
Short-term operating lease liabilities
4,693
3,528
Deferred revenue
117,672
97,629
Total current liabilities
180,702
150,754
Long-term accrued royalties
20,476
26,842
Long-term operating lease liabilities
34,565
37,351
Other long-term liabilities
1,018
15
Total liabilities
236,761
214,962
Common stock
18
15
Additional paid-in capital
828,302
634,721
Accumulated other comprehensive loss
(61
)
(37
)
Accumulated deficit
(411,165
)
(431,612
)
Total stockholders' equity
417,094
203,087
Total liabilities and stockholders' equity
$
653,855
$
418,049
Glu Mobile Inc. GAAP to Adjusted Results
Reconciliation (in thousands) (unaudited)
Three Months Ended
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
2019
2019
2020
2020
2020
2020
GAAP platform commissions
$
28,122
$
30,092
$
28,727
$
35,032
$
43,040
$
37,407
Change in deferred platform commissions
3,972
(1,345
)
(232
)
14,613
(3,371
)
(4,969
)
Platform Commissions, excluding any impact of deferred platform
commissions
$
32,094
$
28,747
$
28,495
$
49,645
$
39,669
$
32,438
GAAP royalties (including impairment of royalties and
minimum guarantees)
$
6,643
$
6,285
$
6,381
$
9,617
$
11,467
$
8,974
Change in deferred royalties
592
(410
)
1
4,420
(1,551
)
(1,014
)
Royalties, excluding any impact of deferred royalties
$
7,235
$
5,875
$
6,382
$
14,037
$
9,916
$
7,960
GAAP other operating expenses (GAAP operating expenses
excluding user acquisition and marketing expenses)
$
34,791
$
37,904
$
43,307
$
43,921
$
46,330
$
48,689
Stock-based compensation
(4,080
)
(4,461
)
(6,382
)
(8,106
)
(8,523
)
(8,798
)
Transitional costs
(5
)
(1
)
(4
)
-
-
(2,142
)
Restructuring costs
-
-
-
-
(1,015
)
-
Adjusted other operating expenses
$
30,706
$
33,442
$
36,921
$
35,815
$
36,792
$
37,749
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 Platform Commissions and Deferred 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 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 platform commissions and deferred royalties 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 platform commissions and deferred
royalties 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 or intangible asset, 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 applies the fair value
provisions of Accounting Standard Codification Topic 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. 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.
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. Transitional
costs also include divestiture related expenses and termination of
certain game related contracts. Glu believes that these
transitional costs affect comparability from period to period and
that investors benefit from a supplemental non-GAAP financial
measure that excludes these expenses.
Litigation Costs. Glu incurred legal costs related to the
complaint filed by the former Chief Executive Officer of Crowdstar
in the Superior Court of the State of California for the County of
Santa Clara against Glu, Time Warner Inc., Intel Capital
Corporation, Middlefield Ventures Inc., Rachel Lam, and Jose Blanc.
Glu believes that these legal costs have no direct correlation to
the operation of its ongoing core business and affect comparability
from period to period and, as a result, that investors benefit from
a supplemental non-GAAP financial measure that excludes these
expenses.
Restructuring Costs. Glu undertook restructuring activities in
the third quarter of 2020 and recorded restructuring charges due to
the termination of certain employees in its Canada and U.S.
offices. Glu recorded the severance costs as an operating expense
when it communicated the benefit arrangement to the employees and
no significant future services, other than a minimum retention
period, were required of the employees 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210208005860/en/
Investor Relations Contact: Bob Jones / Taylor Krafchik
Ellipsis IR@glu.com 646-776-0886
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