Mobile gaming developer Glu Mobile pre-announced its preliminary financial results for Q2 2012 on July 26th. The pre-announcement came following Zynga’s dismal numbers which led to a temporary sell-off in the Glu share of around 15%. However, as the company showed there is no negative readacross between the Zynga decline and Glu and this shows once again that Zynga’s problems are Facebook related.
“We are pleased with our preliminary Q2 results which exceeded the upper end of guidance for our tenth consecutive quarter,” said Niccolo de Masi, President and CEO of Glu. “Glu’s strong year-over-year growth was powered by our mobile-focus, lack of dependence on Facebook web users, and strength in male-oriented games.”
Glu’s preliminary Q212 results are:
- Total non-GAAP revenue of approximately $24.2 million, up 35% year-over-year. This is above the company’s guidance of $20.5 million to $21.5 million.
- Non-GAAP smartphone revenue of approximately $20.4 million, up 111% year-over-year. This is above the company’s guidance of $17.5 million to $18.5 million.
- Total GAAP revenue is approximately $23.6 million and GAAP smartphone revenue is approximately $19.9 million.
- Original IP contributed approximately 95% of non-GAAP smartphone revenues and non-GAAP gross margin is approximately 91%; GAAP gross margin is approximately 87%.
- Non-GAAP Adjusted EBITDA is approximately $1.2 million.
- Cash generated from operations of approximately $1.6 million; cash balance on June 30, 2012 of $24.5 million, which was above guidance.
“The timely acquisition of the Deer Hunter brand was an efficient use of capital, as Glu avoided paying approximately $1.4 million in royalties in the quarter. We are pleased with the prognosis for freemium mobile gaming in the second half of 2012 and our strong product release slate,” said Eric R. Ludwig, Glu’s Chief Financial Officer and Executive Vice President.
De Masi continued, “We will be launching the majority of our second half 2012 titles between September and December in order to capitalize on advertising seasonality and new consumer hardware introductions. As a result, we expect to achieve positive Adjusted EBITDA in the second half of 2012, shaped as an Adjusted EBITDA loss in Q3 and solid Q4 Adjusted EBITDA profitability.”
Glu is providing the following preliminary updated guidance for the second half and full year 2012:
- Non-GAAP smartphone revenue for the full year is expected to be between $81.9 million and $83.9 million. This is above company’s previous guidance of $76.5 million to $81.5 million.
- Total non-GAAP revenue for the full year is expected to be between $94.4 million and $96.4 million. This is above the company’s previous guidance of $86.7 million to $91.7 million.
- Adjusted EBITDA profitability for the second half of 2012 with an expected loss in Q3 and a strong Q4.
- Full year Adjusted EBITDA better than break even.
- December 31, 2012 cash balance greater than $21.0 million and no debt.
Glu now plans to issue its final second quarter 2012 results on Thursday, August 2nd, 2012
Conclusion: Mobile is the place to be. Momentum continues to be strong and we would encourage everybody to get exposure to pure mobile plays such as Glu Mobile and G5 Entertainment. Analysts expect Glu Mobile to turn profitable in 2013 and the share is currently trading at 35 times expected 2013 earnings. Given the fast pace of growth in the app market this seems fair. Sweden listed G5 Entertainment is currently trading at 11 times forecast 2012 earnings and 6 times expected 2013 earnings. We are excited by the opportunities for Glu Mobile ahead – we are really, really, really excited about G5 Entertainment.
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