November 5th, 2008 by Arjan Olsder Posted in Companies & M&A | No Comments »
Yesterday, Glu (GLUU) opened up their Q3 financials. Many sources have already covered it, so this post will just contain the most important parts of the official release. In the next post, we will discuss the earnings call and sum up the most interesting bits of the company that opened today at $ 0.75 and last traded at $ 0.66 as we write this article.
Revenues
Glu reported third quarter consolidated revenue of $23.9 million, compared to $16.7 million, or a 44 percent increase from the third quarter of 2007. Glu's top ten titles represented approximately 28 percent of revenue in the third quarter of 2008, compared to approximately 32 percent of revenue in the second quarter of 2008. The average revenue per top ten title was $678,000, down 31% from the third quarter of 2007.
GAAP Net Loss
The GAAP net loss in the third quarter of 2008 was $(56.9) million, or $(1.93) per basic share, compared to a GAAP net loss of $(0.8) million or $(0.03) per basic share in the third quarter of 2007. GAAP operating profit and net loss for the third quarter of 2008 include a $1.9 million impairment of certain royalty guarantees.
Non-GAAP Net Loss
Third quarter 2008 non-GAAP net loss was $(3.0) million, or $(0.10) per basic share, which excludes amortization of intangible assets of $3.3 million, stock-based compensation charges of $2.1 million, the non-equity component of the MIG earnout of $622,000, restructuring charges of $126,000, transitional expenses of $347,000, an impairment charge on investments in auction-rate securities of $682,000, and a goodwill impairment charge of $46.6 million based on an assessment of goodwill performed during the quarter. This compares to non-GAAP net income of $1.0 million or $0.03 per diluted share, in the third quarter of 2007, which excludes amortization of intangible assets of $550,000 and stock-based compensation charges of $1.2 million. Third quarter 2008 non-GAAP operating loss, which includes the $1.9 million royalty impairment, was $(1.0) million.
"Despite an active release schedule and solid performances in Latin America and parts of Europe, economic turmoil in the U.S. and other parts of the world affected our quarterly results. We expect these conditions to continue, which is reflected in our outlook for the fourth quarter," said Greg Ballard, Glu's president and chief executive officer. "We continue to have optimism around the new platforms including iPhone, Android and N-Gage, which have demonstrated the market's enthusiasm for new high-end devices. We believe that these next-generation platforms will provide a basis for renewed growth for the mobile games market and for Glu in 2009."
"As we navigate through this uncertain economy, we are focused on tightly managing expenses to improve operating margins while still making the strategic investments that we believe are necessary for meeting the market needs in 2009 and beyond," said Eric R. Ludwig, Glu's senior vice president and chief financial officer. "We continue to build a strong business foundation through a globally balanced revenue mix, a world-class title portfolio, and a development team that is focused on both the newest high-end mobile platforms, as well as the traditional mobile phone market that still makes up the great majority of the wireless market."
Fourth Quarter Expectations (Ending December 31, 2008)
- GAAP revenue is expected to be between $21 million and $22 million
- Gross margin, excluding amortization, is expected to be approximately 75 percent
- Non-GAAP operating profit/(loss) is expected to be between $(0.6) million and $0.1 million
- Balance sheet related foreign exchange losses are expected to be approximately $1.5 million.
- Income taxes are expected to be approximately $1.1 million.
- GAAP net loss is expected to be between $(6.7) million and $(7.4) million, or $(0.23) and $(0.25) per basic share
- Non-GAAP net loss is expected to be between $(2.4) million and $(3.1) million or between $(0.08) and ($0.11) per basic share, which excludes $3.3 million for amortization of intangibles, approximately $2.8 million of anticipated stock-based compensation and MIG earnout expense, $2.0 million anticipated gain on auction rate securities and approximately $245,000 of anticipated restructuring and transitional expenses
- Weighted average common shares outstanding for the fourth quarter of 2008 are expected to be approximately 29.5 million basic and 30.0 million diluted
Full Year Expectations (Year Ending December 31, 2008)
- GAAP revenue is expected to be between $89.2 million and $90.2 million
- Non-GAAP operating loss is expected to be between $(0.3) million and $(1.0) million
- GAAP net loss is expected to be between $(76.2) million and $(76.9) million, or between $(2.59) to $(2.62) per basic share
- Non-GAAP net loss is expected to be between $(5.2) million and $(5.9) million, or between $(0.18) and $(0.20) per basic share, which excludes $11.6 million for amortization of intangibles, approximately $10.8 million of anticipated stock-based compensation and MIG earnout expense, $1.1 million of acquired in process research and development, approximately $1.8 million of combined restructuring and transitional expenses, $806,000 in reversal of previous impairments of auction-rate securities and a $46.6 goodwill impairment charge.
- Weighted average common shares outstanding for the calendar year 2008 are expected to be approximately 29.4 million basic and 29.9 million diluted
