Following the pre-announcement of its Q2 2012 results on July 26th, Glu Mobile yesterday hosted its usual conference call in connection with the release of its quarterly numbers. Here are some interesting highlights:
- In his opening remarks, CEO Niccolo de Masi commented on the acquisition of GameSpy Technologies which was announced yesterday, saying that GameSpy brings a track-record of more than 10 years of providing cross-platform, online- and database services to many of the gaming industry’s largest players. Glu Mobile will pay with 600,000 newly issued shares for the company that it has been working with operationally since Gun Brothers multiplayer and Death Match which went live on Android earlier this year. GameSpy technology will be integrated in many of the H2 releases.
- The majority of Glu Mobile’s H2 releases will be between September and December in order to capitalize on consumer adoption of new hardware and favorable advertising seasonality.
- Glu Mobile finished Q2 2012 debt-free with a net cash balance of over USD 24m and the company expects to be free-cash flow positive in Q4.
- CEO de Masi commented also on the increasing number of tablets from different companies saying that Amazon and Microsoft have both already taken a page out of the Apple playbook and produced a vertically integrated tablet under their own brand with control over the operating system, hardware and storefront. Google is said to have the capability to do the same with its Motorola acquisition and its seen success with the Nexus 7 Google Experience tablet by Asus. Glu Mobile views this vertical integration to be a favourable development for itself as they have already seen revenues disproportionately derived from consumers using such devices.
- Commenting on the dilemma of Zynga and other Facebook related services, de Masi said that Facebook itself has publicly recognized that the majority of its traffic will be mobile in the long-term and incorporated discovery of mobile games is a centerpiece of its new app center.
- CEO de Masi highlights that Glu Mobile has designed and built a business centered around arguably the most attractive long-term macro growth trend, throughout technology, media and gaming growth sectors – 1 billion smartphones and tablets growing to 6 billion. He also pointed out that the growth in the tablet market provides a wonderful tailwind for a smartphone focused company such as Glu (or G5 Entertainment – comment from Nordic Investor).
- Asked by an analyst about competition from bigger companies focusing more on mobile, CEO de Masi said that it is pretty much everybody is recognizing that the mobile ecosystem is certainly one which is a little more democratic. There is no company that has a market share over probably 10% right now and that leaves a lot more room for people like Glu Mobile itself to grow.
- Another analyst asked about the M&A landscape over the next 6-12 months as maybe some larger competition tries to acquire market share. De Masi’s answer: “ I don’t know if I can comment in the next six to 12 months but there’s no doubt longer term in any market, when you see more intense competition, you see more players and bigger players. There tends to be a fight for scale. So Glu continues to believe that we have the scale to be an independent success in the long-term but as we’ve always said, we’re aligned with our shareholders and board with regards to a healthy premium for becoming a part of another entity if that’s interesting. So we’re running this business fundamentally as best we can and ultimately whether or not we stay independent or become part of something else is down to what’s on offer. But I do think that you’ve seen big deal making, small deals in the last two years. You’re likely to continue seeing the same thing in the next two years. I think there will be lots of small deals. Some players have to – bigger players have to recharge their cash balances at some point. But eventually, as this market becomes $5 billion, $10 billion of potential revenue a year, obviously it’s something that has to be addressed by the very largest players very significantly if they want to continue to power their own growth.”