“Our results continue to be driven by the growth of freemium revenue and original IP," stated Eric R. Ludwig, Glu’s Chief Financial Officer. “Our fourth quarter is being impacted by the combination of underperforming titles launched in Q3, Apple’s prohibition of incentivized advertising for external HTML 5 sites along with the reduction in the number of titles launched during the quarter as we further optimize their monetization. With more than $24 million in cash and no debt on our balance sheet, as well as an ongoing focus on controlling costs, Glu remains well positioned to execute its long-term monetization strategy.”
Business Outlook as of November 1, 2012:
The following forward-looking statements reflect expectations as of November 1, 2012. Results may be materially different and are affected by many factors, such as: consumer demand for mobile entertainment and specifically Glu’s mobile products; consumer demand for smartphones, tablets and next-generation platforms; development delays on Glu's products; continued uncertainty in the global economic environment; competition in the industry; storefront featuring and premium deck placement; smartphone storefronts, carriers and other distributors maintaining their networks and provisioning systems to enable consumer purchases; changes in foreign exchange rates; Glu's effective tax rate and other factors detailed in this release and in Glu's SEC filings.
Fourth Quarter Expectations – Quarter Ending December 31, 2012:
- Non-GAAP revenue is expected to be between $19.5 million and $20.5 million and non-GAAP smartphone revenue is expected to be between $17.5 million and $18.5 million.
- Non-GAAP gross margin is expected to be approximately 90%.
- Non-GAAP operating expenses are expected to be approximately $22.2 million.
- Adjusted EBITDA, defined as non-GAAP operating loss excluding depreciation of approximately $650,000, is expected to range from $(4.0) million to $(3.1) million.
- Income tax expense is expected to be $(0.5) million.
- Non-GAAP net loss is expected to be between $(5.1) million and $(4.2) million, or a net loss of $(0.08) to $(0.06) per weighted-average basic share.
- Weighted average common shares outstanding for the fourth quarter of 2012 are expected to be approximately 65.9 million basic and 69.9 million diluted.
- We expect to use cash in operations and have a cash balance at December 31, 2012 of approximately $21.5 million with no debt.
- Non-GAAP revenue is expected to be between $86.4 million and $87.4 million and non-GAAP smartphone revenue is expected to be between $73.6 million and $74.6 million.
- Non-GAAP operating loss is expected to range from $(6.8) million to $(5.9) million.
- Adjusted EBITDA is expected to range from $(4.4) million to $(3.5) million.
- Change in deferred revenues and royalties;
- Amortization of in-process development contracts;
- Amortization of intangible assets;
- Stock-based compensation expense;
- Restructuring charges;
- Change in fair value of Blammo earnout;
- Transitional costs;
- Impairment of goodwill;
- Release of tax liabilities; and
- Foreign currency exchange gains and losses primarily related to the revaluation of assets and liabilities.