Glu Reports Third Quarter 2019 Financial Results

• Revenue of $107.1 million and net loss of $(5.1) million
• Record bookings of $120.4 million, up 20% year over year
• Three Growth Games each achieved all-time quarterly record bookings
• Disney Sorcerer’s Arena on track for worldwide launch late Q1 2020
• Revises full year 2019 guidance upward

SAN FRANCISCO–(BUSINESS WIRE)–Glu Mobile Inc. (NASDAQ: GLUU), a leading global developer and publisher of free-to-play mobile games, today announced financial results for its third quarter ended September 30, 2019. The company also provided its outlook for its financial performance in the fourth quarter, increased full year 2019 financial guidance and provided a preliminary outlook for 2020.

Nick Earl, Chief Executive Officer, stated, “Glu reported record third quarter bookings highlighted by double-digit increases in all three of our Growth Games on a year-over-year basis. We were extremely encouraged by our ability to drive early results from Diner DASH Adventures in its first full quarter and to make progress on our development pipeline, particularly with Disney Sorcerer’s Arena, which is on track to launch in Q1 2020. These accomplishments reflect the successful execution of our strategy and reinforce our belief that we are well positioned for continued top line growth heading into next year.”

Third Quarter 2019 Financial Highlights: 

Eric R. Ludwig, Chief Operating Officer and Chief Financial Officer, said, “Glu delivered strong top and bottom line results that soundly beat our guidance. The record bookings were led by strong performances from our three Growth Games, each of which reached all-time highs in quarterly bookings. We increased our full year 2019 guidance by the outperformance in the third quarter. We exit the third quarter with momentum in our core business and expect a significant sequential bottom line increase in the fourth quarter.”

Financial Outlook as of November 6, 2019:

Glu is providing its financial outlook for the fourth quarter and full year 2019 as follows:

Fourth Quarter 2019 Guidance: 

Full Year 2019 Guidance

2020 Bookings Outlook:

• For fiscal 2020, the company expects the following results from its current live titles:
  • High single digit percentage increases on a year-over-year basis from its three Growth Games.
  • A full year of contribution from Diner DASH Adventures.
  • Expected declines in catalog titles will be more than offset by increases in the company’s three Growth Games, and Diner DASH Adventures.
  • As a result, the company expects an overall year-over-year growth rate in the low-single digit range, excluding new titles, specifically Disney Sorcerer’s Arena, Originals and Deer Hunter Next.
• The company’s outlook includes only bookings from games that are live and excludes bookings and variable expenses of platform fees, royalties, UA spend, and variable compensation on the above-mentioned new titles.
• Bookings and variable cost contributions from games launched in 2020 will be included in the company’s quarterly and full year guidance in the quarter following the timing of their global launch.
• The company believes that this new guidance philosophy will provide a higher quality view on its outlook and will reduce the exposure to the timing of global launches.

2020 Adjusted EBITDA Outlook:

• Excluding bookings and variable costs from games launched in 2020, the company expects Adjusted EBITDA to be relatively in line, in absolute dollars, with the full year 2019 guidance levels.
• Studio headcount costs for these new titles have already been included in operating expenses in the Adjusted EBITDA outlook.
• Newly launched titles generally have Adjusted EBITDA losses until they scale to appropriate levels.
• The company expects new games launched in 2020, collectively, to contribute modestly to Adjusted EBITDA.
• Given the expected timing and margin characteristics of these 2020 launches, the company anticipates a low single digit Adjusted EBITDA loss in the first half of 2020 when factoring in new titles and it believes that Adjusted EBITDA will grow significantly throughout the second half of the year as new titles scale.
• The company expects to exit 2020 with an Adjusted EBITDA margin of at least 15%, inclusive of games launched during the year.

Glu does not provide guidance on a GAAP basis primarily due to the fact that Glu is unable to predict, with reasonable accuracy, future changes in its deferred revenue and corresponding cost of revenue. The amount of Glu’s deferred revenue and cost of revenue for any given period is difficult to predict due to differing estimated useful lives of paying users across games, variability of monthly revenue, platform commissions and royalties by game and unpredictability of revenue from new game releases. Future changes in deferred revenue and deferred cost of revenue are uncertain and could be material to Glu’s results computed in accordance with GAAP. Accordingly, Glu is unable to provide a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure without unreasonable effort.

Quarterly Conference Call Information:

Glu will discuss its quarterly results via teleconference today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Please dial (866) 582-8907 (domestic), or (760) 298-5046 (international), with conference ID # 3779435 to access the conference call at least five minutes prior to the 2:00 p.m. Pacific Time start time. A live webcast and replay of the call will also be available on the investor relations portion of the company’s website at www.glu.com/investors. An audio replay will be available between 5:00 p.m. Pacific Time, November 6, 2019, and 8:59 p.m. Pacific Time, November 13, 2019, by calling (855) 859-2056, or (404) 537-3406, with conference ID # 3779435.

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;
• Non-cash warrant expense;
• Impairment and amortization of intangible assets;
• Stock-based compensation expense;
• Restructuring charges;
• Transitional costs; and
• Litigation 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.

Cautions Regarding Forward-Looking Statements

This news release contains forward-looking statements, including those regarding our “Financial Outlook as of November 6, 2019” (“Fourth Quarter 2019 Guidance,” “Full Year 2019 Guidance,” “2020 Bookings Outlook” and “2020 Adjusted EBITDA Outlook”), and the statements that Disney Sorcerer’s Arena is on track to launch in Q1 2020, our belief that we are well positioned for continued top line growth heading into next year and that we exit the third quarter with momentum in our core business and expect a significant sequential bottom line increase in the fourth quarter. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Investors should consider important risk factors, which include: the risk that consumer demand for smartphones, tablets and next-generation platforms does not grow as significantly as we anticipate or that we will be unable to capitalize on any such growth; the risk that we do not realize a sufficient return on our investment with respect to our efforts to develop free-to-play games for smartphones, tablets and next-generation platforms, the risk that we will be unable build successful Growth Games that provide predictable bookings and year over year growth; 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 August 8, 2019 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 creator of mobile games. Founded in 2001, Glu is headquartered in San Francisco with additional locations in San Mateo, 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, Cooking DASH, Covet Fashion, Deer Hunter, Design Home, Diner DASH Adventures, MLB Tap Sports Baseball and Kim Kardashian: Hollywood 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.

COOKING DASH, COVET FASHION, DEER HUNTER, DESIGN HOME, DINER DASH, TAP SPORTS, GLU, GLU MOBILE, and the ‘g’ character logo are trademarks of Glu Mobile Inc.

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.

Contacts

Investor Relations:
Bob Jones / Taylor Krafchik

Ellipsis

IR@glu.com
646-776-0886

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