US mobile gaming company Glu Mobile, our most recent trading idea (published on January 23rd), just reported a strong Q4 2011 report, well ahead its previous guidance. Non-GAAP revenue amounted to USD 20.1m versus expected USD 16.5m. Non-GAAP smartphone revenue was up 340% year over year and smartphones accounted for 75% of total revenues during Q4 2011.
Says CEO Niccolo de Masi: “The fourth quarter was a strong finish to 2011 for Glu. Our non-GAAP freemium revenues grew 66% on a sequential basis, driven by strong growth in microtransactions and in-game advertising. We are continuing to successfully execute our freemium social strategy with growth coming from both our popular existing titles and the successful launches of a number of new games. With integration of our two 2011 acquisitions proceeding to plan, we look forward to 2012 smartphone revenue growth with confidence.”
CFO Eric Ludwig comments: “We are very pleased with our strong fourth quarter performance, which exceeded our expectations across all of our key metrics. With a healthy balance sheet and continued solid execution from our seven global studios, we believe we are well positioned to scale the business, leverage our growing user base and drive significant smartphone revenue growth in 2012.”
The following outlook is given for 2012: “Non-GAAP revenue is expected to be between $79.5 million and $85.5 million and non-GAAP smartphone revenue is expected to be between $71.0 million and $75.0 million. Non-GAAP operating income/(loss) is expected to be slightly negative in the fourth quarter of 2012. We expect to achieve break-even Adjusted EBITDA in the fourth quarter of 2012.”
Our take: Since our trading idea on January 23rd, the Glu Mobile share is up some 38% and the share is up another 6% right now in after hours trading in the USA. Nevertheless, we think the share has more to give on the short run. The most recent statistics for Glu Mobile’s bestsellers look still very promising. Sentiment around mobile and social gaming companies is strong and improving. We expect the sector to continue to do well with G5 Entertainment being our top-pick.