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#Glu Mobile: Q4 results ok, interesting things happening

GluMobileLogoNewGlu Mobile posted better-than-expected Q4 financial results yesterday, but its Q1 guidance fell once again short of analyst expectations, causing the stock to trade lower after hours.

Glu posted Q4 revenue of $21 million, up from $15.2 million a year ago, and ahead of the Street consensus of $20.04 million. Non-GAAP loss was 5 cents a share, while the Street had expected a loss of 7 cents.

For Q1, the company sees revenue of $17 million to $18.5 million and a non-GAAP loss of 6-8 cents a share; Street consensus has been $21.9 million and a loss of 3 cents.

The fourth quarter came in at the high end of expectations across our key metrics,” CEO Niccolo de Masi said in a statement. “Consistent with our guidance, smartphone revenue was flat compared to Q3 due to the decision to delay the global launch of approximately half of our Q4 2012 titles. We anticipate seeing momentum accelerate as new titles launch incorporating our new monetization systems.”

CEO de Masi stated at the conference call in connection with the Q4 results release that Glu Mobile, as discussed in the Q3 call, took the decision to delay approximately half of its Q4 2012 titles. This was in order to allow map an opportunity to implement changes designed to improve average revenue per daily active user in each of them. None of these delayed titles have been killed, although more rework time than anticipated last quarter has been required for each. Glu Mobile expects that all will be live in the spring except for one which will be launched in H2 2013. Due to this timing the super majority of revenue impact from these delayed titles will be in Q2 and beyond.

Mr de Masi also gave the guidance that Glu Mobile expects to launch approximately 15 titles with five in the first quarter. Two of these are titles pushed from Q4 2012, Dragon Storm and Gun Bros 2 and three are sequels, Stardom Hollywood, Small City and Samurai vs. Zombies Defense 2. The company also expects to launch approximately five titles in Q2. In addition to these launches, Glu Mobile’s first real money gambling title will be in the slots category with a theme based around the company’s Samurai vs. Zombies IP. It will launch in Q1 on iOS and the UK through the partnership with Probability PLC. A couple of weeks ago, Glu Mobile closed the small investment in premium casino startup Bee Cave Games as part of its efforts to ramp up capabilities in this sector. Bee Cave’s founders have extensive casino backgrounds, most recently having worked at Zynga.

On a different note, Glu Mobile launches a new Glu Publishing division. Glu Publishing will partner with third-party developers worldwide who wish to tap into its capabilities. Each development team with a product that has demonstrated a strong kernel of success be it on a given platform, country or language, we will be able to partner with Glu Publishing to dramatically expand its worldwide reach. Glu Publishing will act as a one-stop shop for successful iOS titles looking to reach the Android, Windows 8, and Amazon platforms. Leveraging its offices in Beijing, Moscow, and Hyderabad, Glu Publishing will also act as the conduit for connecting emerging market game developers with North American consumers. Its current guidance does not reflect any revenue from this business line. In H2 2013, Glu expects to launch 4 titles. In 2014, Glu will aim to launch up to one third-party title per month. The Glu Publishing model is designed to enhance operating leverage in the business as well as the long-term top-line growth trajectory.

Commenting on the outlookg for FY 2013, CFO Eric Ludwig said that Glu expects total non-GAAP revenues to be in the range of $84 million to $92 million, which includes $80 million to $88 million in non-GAAP smartphone revenues. 2013 will be the last year, where Glu expects to experience declines in its legacy feature phone business that will materially impact its business. It expects feature phone revenues to decline $9.1 million from 2012, down to $4 million for 2013. Adjusted EBITDA loss is expected to range from $1.8 million to $7.5 million . Importantly he notes, however, that while Glu expects its batting average to improve from 2012, the 2013 guidance does not assume any multi-month top 75 grossing titles on the iOS and the Android App stores. As such upside to its 2013 numbers exists from any title that persists in the top charts for a sustained period of time. Secondly, Glu has not  included any revenue from Glu Publishing nor our Probability Gaming real money gambling titles in its guidance.


Nordic Investor

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