With that, I’ll turn the call over to Niccolo.
Niccolo de Masi
Good afternoon and a warm welcome to everyone joining us today. Before I begin, allow me to direct you to the supplemental presentation accompanying today’s earnings. It can be accessed via our investor website, glu.com/investors. In addition to the presentation, you will find video demos of our upcoming summer titles.
I am delighted to announce that in Q1 2012, we delivered $17.4 million of non-GAAP Smartphone revenue. This was ahead of expectations, representing 158% growth from the same period last year and a 17% growth quarter-on-quarter. The percentage of total non-GAAP revenue derived from Smartphones increased from 75% in Q4 ’11 to 81% in Q1 ’12. During the first quarter of 2012, we generated a modest adjusted EBITDA profit due to our strength Smartphone revenue, favorable gross margin expansion and tight cost controls. We anticipate the Smartphone revenue will continue to grow from Q1 levels in order to cover planned headcount growth, annual merit increases and direct marketing spend. Glu is expected to be sustainably adjusted EBITDA and operating cash flow positive from Q4 of this year onwards.Underpinning these strong results were our update to our Q4 ’11 title launches as well as solid performances from new releases, Small Street and Samurai versus Zombies Defense. The latter was our first title from our Griptonite studio that we acquired last August. Both of these titles benefited from additional live beta testing prior to worldwide release. While launching later than originally anticipated, we believe this additional refinement period will lead to larger lifetime revenues and would have otherwise resulted from a more premature release. Looking at these positive data points, we will be applying a similarly elongated live beta period for future new launches. This will reduce the number of titles reaching worldwide release in Q2. However, we believe in turn that this will set up Glu up for a strong second half of the year. Read the rest of this transcript for free on seekingalpha.com
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