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Glu Reports Third Quarter 2012 Financial Results

In the financial tables below, Glu has provided a reconciliation of the most comparable GAAP financial measure to each of the historical non-GAAP financial measures used in this press release.

   
 
Glu Mobile Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, 2012 December 31, 2011
 
ASSETS
Cash and cash equivalents $ 24,051 $ 32,212
Accounts receivable, net 14,604 11,821
Prepaid royalties 29 483
Prepaid expenses and other current assets   2,972     1,881  
Total current assets 41,656 46,397
 
Property and equipment, net 4,512 3,934
Other long-term assets 582 404
Intangible assets, net 12,451 10,078
Goodwill   19,276     21,991  
Total assets $ 78,477   $ 82,804  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 6,903 $ 6,894
Accrued liabilities 2,468 939
Accrued compensation 6,455 5,404
Accrued royalties 2,849 3,865
Accrued restructuring 118 887
Deferred revenues   8,835     7,139  
Total current liabilities 27,628 25,128
Other long-term liabilities   5,920     8,503  
Total liabilities   33,548     33,631  
 
Common stock 6 6
Additional paid-in capital 269,752 260,744
Accumulated other comprehensive income 406 266
Accumulated deficit   (225,235 )   (211,843 )
Stockholders' equity   44,929     49,173  
Total liabilities and stockholders' equity $ 78,477   $ 82,804  

               
 
Glu Mobile Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
Three Months Ended Nine Months Ended

September 30, 2012
September 30, 2011 September 30, 2012 September 30, 2011
 
Revenues $ 21,347 $ 16,905 $ 66,512 $ 51,011
 
Cost of revenues:
Royalties and other cost of revenues 2,194 3,383 6,888 10,344
Amortization of intangible assets   1,025     2,375     2,710     3,895  
Total cost of revenues   3,219     5,758     9,598     14,239  
Gross profit   18,128     11,147     56,914     36,772  
 
Operating expenses:
Research and development 9,979 10,808 40,709 26,413
Sales and marketing 5,545 3,576 14,621 10,677
General and administrative 2,466 3,748 11,388 10,188
Amortization of intangible assets 495 330 1,485 330
Restructuring charge 213 - 533 637
Impairment of goodwill   3,613     -     3,613     -  
Total operating expenses   22,311     18,462     72,349     48,245  
 
Loss from operations (4,183 ) (7,315 ) (15,435 ) (11,473 )
 
Interest and other income/(expense), net:
Interest income 7 4 28 33
Interest expense (2 ) - (11 ) (72 )
Other income/(expense), net   (460 )   340     (628 )   892  
Interest and other income/(expense), net   (455 )   344     (611 )   853  
 
Loss before income taxes (4,638 ) (6,971 ) (16,046 ) (10,620 )
Income tax benefit/(provision)   1,075     813     2,654     (462 )
Net loss $ (3,563 ) $ (6,158 ) $ (13,392 ) $ (11,082 )
 
Net loss per share - basic and diluted $ (0.06 ) $ (0.10 ) $ (0.21 ) $ (0.20 )
 
Weighted average common shares outstanding - basic and diluted 64,562 60,461 63,865 55,699
 
Stock-based compensation expense included in:
Research and development $ (3,388 ) $ 356 $ 2,268 $ 587
Sales and marketing 73 96 343 256
General and administrative   437     386     1,385     897  
Total stock-based compensation expense $ (2,878 ) $ 838   $ 3,996   $ 1,740  

                           
 
Glu Mobile Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(unaudited)

For the Three Months Ended

March 31, 2011
June 30, 2011 September 30, 2011 December 31, 2011 March 31, 2012 June 30, 2012 September 30, 2012
 
GAAP revenues
Featurephone $ 10,478 $ 8,253 $ 7,248 $ 5,112 $ 4,165 $ 3,710 $ 2,924
Smartphone   5,948     9,427     9,657     10,062     17,379     19,911     18,423  
Total GAAP revenues   16,426     17,680     16,905     15,174     21,544     23,621     21,347  
 

Change in deferred revenues and amortization of in-process development contracts
Featurephone change in deferred revenue (63 ) (6 ) 5 (20 ) (7 ) 17 (21 )

Smartphone change in deferred revenue and amortization of in-processdevelopment contracts
  798     240     875     4,897     57     534     (167 )

Total change in deferred revenues and amortization of in-process development contracts
  735     234  

 
880     4,877     50     551     (188 )
 
Non-GAAP Revenues
Featurephone 10,415 8,247 7,253 5,092 4,158 3,727 2,903
Smartphone   6,746     9,667     10,532     14,959     17,436     20,445     18,256  
Total non-GAAP Revenues   17,161     17,914     17,785     20,051     21,594     24,172     21,159  
 
GAAP gross profit 11,769 13,856 11,147 11,046 18,234 20,552 18,128

Change in deferred revenues and amortization of in-process developmentcontracts
735 234 880 4,877 50 551 (188 )
Amortization of intangible assets 817 703 2,375 1,552 753 932 1,025
Change in deferred royalty expense   33     20     1     (99 )   60     67     (30 )
Non-GAAP gross profit   13,354     14,813     14,403     17,376     19,097     22,102     18,935  
 
GAAP operating expense 14,347 15,436 18,462 20,807 24,269 25,769 22,311
Stock-based compensation (397 ) (505 ) (838 ) (1,370 ) (3,836 ) (3,038 ) 2,878
Amortization of intangible assets - - (330 ) (495 ) (495 ) (495 ) (495 )
Transitional costs - - (981 ) (326 ) (173 ) (30 ) (192 )
Change in fair value of Blammo earnout - - 178 (117 ) (645 ) (386 ) 954
Impairment of goodwill - - - - - - (3,613 )
Restructuring charge   (490 )   (147 )   -     92     -     (320 )   (213 )
Non-GAAP operating expense   13,460     14,784     16,491     18,591     19,120     21,500     21,630  
 
GAAP operating loss (2,578 ) (1,580 ) (7,315 ) (9,761 ) (6,035 ) (5,217 ) (4,183 )

Change in deferred revenues and amortization of in-process developmentcontracts
735 234 880 4,877 50 551 (188 )
Non-GAAP cost of revenues adjustment 850 723 2,376 1,453 813 999 995
Stock-based compensation 397 505 838 1,370 3,836 3,038 (2,878 )
Amortization of intangible assets - - 330 495 495 495 495
Transitional costs - - 981 326 173 30 192
Change in fair value of Blammo earnout - - (178 ) 117 645 386 (954 )
Impairment of goodwill - - - - - - 3,613
Restructuring charge   490     147     -     (92 )   -     320     213  
Non-GAAP operating income/(loss)   (106 )   29     (2,088 )   (1,215 )   (23 )   602     (2,695 )
 
GAAP net loss (3,172 ) (1,752 ) (6,158 ) (10,019 ) (6,841 ) (2,988 ) (3,563 )

Change in deferred revenues and amortization of in-process developmentcontracts
735 234 880 4,877 50 551 (188 )
Non-GAAP cost of revenues adjustment 850 723 2,376 1,453 813 999 995
Non-GAAP operating expense adjustment 887 652 1,971 2,216 5,149 4,269 681
Foreign currency exchange loss/(gain) (198 ) (363 ) (344 ) 116 373 (205 ) 460
Release of tax liabilities   -     -     -     -     -     (2,427 )   -  
Non-GAAP net income/(loss) $ (898 ) $ (506 ) $ (1,275 ) $ (1,357 ) $ (456 ) $ 199   $ (1,615 )
 
 
Reconciliation of net loss and net loss per share:
GAAP net loss per share - basic and diluted $ (0.06 ) $ (0.03 ) $ (0.10 ) $ (0.16 ) $ (0.11 ) $ (0.05 ) $ (0.06 )
Non-GAAP net income/(loss) per share - basic and diluted $ (0.02 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.01 ) $ 0.00 $ (0.03 )
Shares used in computing Non-GAAP basic net income/(loss) per share 52,048 54,587 60,461 62,973 63,229 63,802 64,562
Shares used in computing Non-GAAP diluted net income/(loss) per share 52,048 54,587 60,461 62,973 63,229 69,490 64,562
 
Non-GAAP operating expense break-out:
GAAP research and development expense $ 7,166 $ 8,439 $ 10,808 $ 12,660 $ 15,033 $ 15,697 $ 9,979
Transitional costs - - (219 ) (23 ) (68 ) (1 ) (45 )
Stock-based compensation   (100 )   (131 )   (356 )   (800 )   (3,260 )   (2,396 )   3,388  
Non-GAAP research and development expense   7,066     8,308     10,233     11,837     11,705     13,300     13,322  
 
GAAP sales and marketing expense 3,757 3,344 3,576 3,930 4,375 4,701 5,545
Transitional costs - - (2 ) (5 ) - - (15 )
Stock-based compensation   (66 )   (94 )   (96 )   (95 )   (115 )   (155 )   (73 )
Non-GAAP sales and marketing expense   3,691     3,250     3,478     3,830     4,260     4,546     5,457  
 
GAAP general & administrative expense 2,934 3,506 3,748 3,814 4,366 4,556 2,466
Transitional costs - - (760 ) (298 ) (105 ) (29 ) (132 )
Change in fair value of Blammo earnout - - 178 (117 ) (645 ) (386 ) 954
Stock-based compensation   (231 )   (280 )   (386 )   (475 )   (461 )   (487 )   (437 )
Non-GAAP general and administrative expense $ 2,703   $ 3,226   $ 2,780   $ 2,924   $ 3,155   $ 3,654   $ 2,851  

                           
 
Glu Mobile Inc.
Non-GAAP Adjusted EBITDA
(in thousands, except per share data)
(unaudited)
For the Three Months Ended
March 31, 2011 June 30, 2011 September 30, 2011 December 31, 2011 March 31, 2012 June 30, 2012

September 30, 2012
 
GAAP net loss $ (3,172 ) $ (1,752 ) $ (6,158 ) $ (10,019 ) $ (6,841 ) $ (2,988 ) $ (3,563 )

Change in deferred revenues and amortization of in-processdevelopment contracts
735 234 880 4,877 50 551 (188 )
Change in deferred royalty expense 33 20 1 (99 ) 60 67 (30 )
Amortization of intangible assets 817 703 2,705 2,047 1,248 1,427 1,520
Depreciation 427 406 470 543 562 556 554
Stock-based compensation 397 505 838 1,370 3,836 3,038 (2,878 )
Change in fair value of Blammo earnout - - (178 ) 117 645 386 (954 )
Transitional costs - - 981 326 173 30 192
Impairment of goodwill - - - - - - 3,613
Restructuring charge 490 147 - (92 ) - 320 213
Foreign currency exchange loss/(gain) (198 ) (363 ) (344 ) 116 373 (205 ) 460
Interest (income)/expense, net 18 25 (4 ) (10 ) (7 ) (5 ) (5 )
Other non operating expense - 9 4 - - - -
Income tax provision/(benefit)   774     501     (813 )   152     440     (2,019 )   (1,075 )
Total Non-GAAP Adjusted EBITDA $ 321   $ 435   $ (1,618 ) $ (672 ) $ 539   $ 1,158   $ (2,141 )

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