May 7th, 2009 by Arjan Olsder Posted in Companies & M&A | No Comments »
Yesterday, Glu has announced it’s financial results for the first quarter of 2009. Losses are down, which is a positive sound. We analysed the press release and conference call about it.
Glu reported $ 20.8 million in revenues. $ 0.2 million more compared to the first quarter of 2008. Glu reduced its GAAP loss from $5.5 million and $6.0 million to $2.9 million and $5.8 million. Per share this was a net loss of $ 0,19 compared to $0,21 last year.
The top 10 of their titles represented 32% of the revenues (up 1% from Q4 08 and down 10% from Q1 08). The average revenue of a top 10 title was $ 658.000 in Q1. 48% of the revenue was generated through their top 4 operators. Verizon brought in 22% and Chine Mobile 12%.
For the quarter ended March 31, 2009, non-GAAP income from operations, which excludes stock-based compensation expense, amortization of intangibles arising from business combinations, transitional expenses and MIG earnout expenses, was $1.4 million, an increase from $0.2 million in the same period last year. Non-GAAP net loss was $(1.0) million for the quarter ended March 31, 2009, an increase from a loss of $(0.4) million in the same period last year. Non-GAAP basic loss per share was $(0.03) for the quarter ended March 31, 2009, a decrease from a non-GAAP basic loss per share of $(0.01) in the same period last year.
"We were pleased with the company's performance in the first quarter, which was highlighted by better-than-expected revenue and a $1.4 million non-GAAP operating profit, or a 6.7% operating margin," said Greg Ballard, chief executive officer of Glu. "We have made solid progress against our strategy for next-generation handsets, now offering eight games for the iPhone and twenty-nine games for the Blackberry app store. Equally important, we expanded our global partnership with Activision, which will bring five premier titles to the mobile platform beginning later this year. While we expect the macro environment to remain challenging as a result of global economic conditions, we remain focused on our key growth initiatives and believe that Glu is well positioned to benefit from the growth of the mobile gaming market opportunity from a long-term perspective."
The Company ended the quarter with a cash and equivalent balance of $14.7 million, and had $4.5 million outstanding on its line of credit.
"We remain committed to achieving positive cash flow from operations during 2009 and are confident that we will achieve this goal based on the expense control initiatives taken last year," said Eric R. Ludwig, Glu's chief financial officer. "We are focused on continuing to improve the company's capital structure and believe we have the resources and ability to invest in our growth initiatives."
During the conference call, Glu explained that Verizon did very well for the company. 7 of Glu’s mobile games went up in the top 25. Glu also benefited from China Mobile payments as the operator paid out $ 700.000 in a catch-up payment.
Within their vision, the company is divided in three parts. One is the traditional operator business. The second is iPhone business and the third is about all other App Stores out there in the market.
When it comes to the operator business, the company sees recovery in the market. In Europe it managed to increase it’s rev-share on several operators and on others it was to support less devices. Glu also expects that operators will more and more follow Apple’s example by supporting a 70/30 revenue split.
When it comes to iPhone, the company claims success with its latest releases and aggressive pricing strategy. Sacrifices are made to establish itself on the platform. Though overall downloads are encouraging, revenues are not yet attractive. Greg also explains that the tail of a game on iPhone is very short compared to the traditional operator business. With the new features of iPhone 3.0, the company hopes to introduce several life extenders.
Glu is very positive about the rise of the App Stores. Revenues are in most cases 70/30 and a lot of them don’t require any big effort. When big effort is required, the company evaluates the value of it first. The three focal points will be the Windows Marketplace, BlackBerry App World and Nokia Ovi (where they have their N-Gage titles as well).
