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TheStreet Open House

Glu Reports Fourth Quarter And Full Year 2012 Financial Results

Glu's Compensation Committee adopted the 2008 Equity Inducement Plan, which is a non-stockholder approved plan, to facilitate the granting of stock options as an inducement to new employees to join Glu. NASDAQ Marketplace Rule 5635(c)(iv) requires a public announcement of equity awards made under this type of plan.

About Glu Mobile

Glu Mobile (NASDAQ:GLUU) is a leading global developer and publisher of freemium games for smartphone and tablet devices. Glu is focused on creating compelling original IP games such as BLOOD & GLORY, DEER HUNTER, FRONTLINE COMMANDO, GUN BROS, and SAMURAI VS. ZOMBIES DEFENSE on a wide range of platforms including iOS, Android™, Windows Phone, Google Chrome and MAC OS. Glu’s unique technology platform enables its titles to be accessible to a broad audience of consumers globally. Founded in 2001, Glu is headquartered in San Francisco with a major office outside Seattle, and international locations in Canada, China and Russia. Consumers can find high-quality entertainment wherever they see the ‘g’ character logo or at www.glu.com. For live updates, please follow Glu via Twitter at www.twitter.com/glumobile or become a Glu fan at www.facebook.com/glumobile.

BLOOD & GLORY, CONTRACT KILLER, CONTRACT KILLER ZOMBIES, DEATH DOME, DEER HUNTER, DRAGON SLAYER, FRONTLINE COMMANDO, GUN BROS, SAMURAI VS ZOMBIES DEFENSE, SMALL STREET, GLU, GLU MOBILE and the 'g' character logo are trademarks of Glu Mobile Inc.

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)
 
December 31, 2012 December 31, 2011
 
ASSETS
Cash and cash equivalents $ 22,325 $ 32,212
Accounts receivable, net 11,881 11,821
Prepaid royalties - 483
Prepaid expenses and other current assets   2,487     1,881  
Total current assets 36,693 46,397
 
Property and equipment, net 5,026 3,934
Other long-term assets 227 404
Intangible assets, net 10,889 10,078
Goodwill   19,440     21,991  
Total assets $ 72,275   $ 82,804  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 7,785 $ 6,894
Accrued liabilities 2,410 939
Accrued compensation 5,989 5,404
Accrued royalties 2,781 3,865
Accrued restructuring 4 887
Deferred revenues   9,031     7,139  
Total current liabilities 28,000 25,128
Other long-term liabilities   5,388     8,503  
Total liabilities   33,388     33,631  
 
Common stock 6 6
Additional paid-in capital 271,016 260,744
Accumulated other comprehensive income 167 266
Accumulated deficit   (232,302 )   (211,843 )
Stockholders' equity   38,887     49,173  
Total liabilities and stockholders' equity $ 72,275   $ 82,804  

 
 
Glu Mobile Inc. Consolidated Statements of Operations (in thousands, except per share data) (unaudited)
  Three Months Ended   Twelve Months Ended
December 31, 2012   December 31, 2011 December 31, 2012   December 31, 2011
 
Revenues $ 20,981 $ 15,174 $ 87,493 $ 66,185
 
Cost of revenues:
Royalties and other cost of revenues 2,052 2,576 8,940 12,920
Amortization of intangible assets   1,073     1,552     3,783     5,447  
Total cost of revenues   3,125     4,128     12,723     18,367  
Gross profit   17,856     11,046     74,770     47,818  
 
Operating expenses:
Research and development 13,566 12,660 54,275 39,073
Sales and marketing 6,272 3,930 20,893 14,607
General and administrative 3,356 3,814 14,744 14,002
Amortization of intangible assets 495 495 1,980 825
Restructuring charge 838 (92 ) 1,371 545
Impairment of goodwill   -     -     3,613     -  
Total operating expenses   24,527     20,807     96,876     69,052  
 
Loss from operations (6,671 ) (9,761 ) (22,106 ) (21,234 )
 
Interest and other income/(expense), net:
Interest income/(expense) 4 10 21 (29 )
Other income/(expense), net   260     (116 )   (368 )   776  
Interest and other income/(expense), net   264     (106 )   (347 )   747  
 
Loss before income taxes (6,407 ) (9,867 ) (22,453 ) (20,487 )
Income tax benefit/(provision)   (660 )   (152 )   1,994     (614 )
Net loss $ (7,067 ) $ (10,019 ) $ (20,459 ) $ (21,101 )
 
Net loss per share - basic and diluted $ (0.11 ) $ (0.16 ) $ (0.32 ) $ (0.37 )
 
Weighted average common shares outstanding - basic and diluted 65,678 62,973 64,318 57,518
 
Stock-based compensation expense included in:
Research and development $ 1,223 $ 800 $ 3,491 $ 1,387
Sales and marketing 43 95 386 351
General and administrative   560     475     1,945     1,372  
Total stock-based compensation expense $ 1,826   $ 1,370   $ 5,822   $ 3,110  

 
 
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 December 31, 2012
 
GAAP revenues
Featurephone $ 10,478 $ 8,253 $ 7,248 $ 5,112 $ 4,165 $ 3,710 $ 2,924 $ 2,336
Smartphone   5,948     9,427     9,657     10,062     17,379     19,911     18,423     18,645  
Total GAAP revenues   16,426     17,680     16,905     15,174     21,544     23,621     21,347     20,981  
 
Change in deferred revenues and amortization of in-process development contracts
Featurephone change in deferred revenue (63 ) (6 ) 5 (20 ) (7 ) 17 (21 ) 17
Smartphone change in deferred revenue and amortization of in-process development contracts   798     240     875     4,897     57     534     (167 )   (167 )
Total change in deferred revenues and amortization of in-process development contracts   735     234     880     4,877     50     551     (188 )   (150 )
 
Non-GAAP Revenues
Featurephone 10,415 8,247 7,253 5,092 4,158 3,727 2,903 2,353
Smartphone   6,746     9,667     10,532     14,959     17,436     20,445     18,256     18,478  
Total non-GAAP Revenues   17,161     17,914     17,785     20,051     21,594     24,172     21,159     20,831  
 
GAAP gross profit 11,769 13,856 11,147 11,046 18,234 20,552 18,128 17,856
Change in deferred revenues and amortization of in-process development contracts 735 234 880 4,877 50 551 (188 ) (150 )
Amortization of intangible assets 817 703 2,375 1,552 753 932 1,025 1,073
Change in deferred royalty expense   33     20     1     (99 )   60     67     (30 )   (121 )
Non-GAAP gross profit   13,354     14,813     14,403     17,376     19,097     22,102     18,935     18,658  
 
GAAP operating expense 14,347 15,436 18,462 20,807 24,269 25,769 22,311 24,527
Stock-based compensation (397 ) (505 ) (838 ) (1,370 ) (3,836 ) (3,038 ) 2,878 (1,826 )
Amortization of intangible assets - - (330 ) (495 ) (495 ) (495 ) (495 ) (495 )
Transitional costs - - (981 ) (326 ) (173 ) (30 ) (192 ) (94 )
Change in fair value of Blammo earnout - - 178 (117 ) (645 ) (386 ) 954 (90 )
Impairment of goodwill - - - - - - (3,613 ) -
Restructuring charge   (490 )   (147 )   -     92     -     (320 )   (213 )   (838 )
Non-GAAP operating expense   13,460     14,784     16,491     18,591     19,120     21,500     21,630     21,184  
 
GAAP operating loss (2,578 ) (1,580 ) (7,315 ) (9,761 ) (6,035 ) (5,217 ) (4,183 ) (6,671 )
Change in deferred revenues and amortization of in-process development contracts 735 234 880 4,877 50 551 (188 ) (150 )
Non-GAAP cost of revenues adjustment 850 723 2,376 1,453 813 999 995 952
Stock-based compensation 397 505 838 1,370 3,836 3,038 (2,878 ) 1,826
Amortization of intangible assets - - 330 495 495 495 495 495
Transitional costs - - 981 326 173 30 192 94
Change in fair value of Blammo earnout - - (178 ) 117 645 386 (954 ) 90
Impairment of goodwill - - - - - - 3,613 -
Restructuring charge   490     147     -     (92 )   -     320     213     838  
Non-GAAP operating income/(loss)   (106 )   29     (2,088 )   (1,215 )   (23 )   602     (2,695 )   (2,526 )
 
GAAP net loss (3,172 ) (1,752 ) (6,158 ) (10,019 ) (6,841 ) (2,988 ) (3,563 ) (7,067 )
Change in deferred revenues and amortization of in-process development contracts 735 234 880 4,877 50 551 (188 ) (150 )
Non-GAAP cost of revenues adjustment 850 723 2,376 1,453 813 999 995 952
Non-GAAP operating expense adjustment 887 652 1,971 2,216 5,149 4,269 681 3,343
Foreign currency exchange loss/(gain) (198 ) (363 ) (344 ) 116 373 (205 ) 460 (263 )
Release of tax liabilities   -     -     -     -     -     (2,427 )   -     -  
Non-GAAP net income/(loss) $ (898 ) $ (506 ) $ (1,275 ) $ (1,357 ) $ (456 ) $ 199   $ (1,615 ) $ (3,185 )
 
 
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 ) $ (0.11 )
Non-GAAP net income/(loss) per share - basic and diluted $ (0.02 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.01 ) $ 0.00 $ (0.03 ) $ (0.05 )
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 65,678
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 65,678
 
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 $ 13,566
Transitional costs - - (219 ) (23 ) (68 ) (1 ) (45 ) (70 )
Stock-based compensation   (100 )   (131 )   (356 )   (800 )   (3,260 )   (2,396 )   3,388     (1,223 )
Non-GAAP research and development expense   7,066     8,308     10,233     11,837     11,705     13,300     13,322     12,273  
 
GAAP sales and marketing expense 3,757 3,344 3,576 3,930 4,375 4,701 5,545 6,272
Transitional costs - - (2 ) (5 ) - - (15 ) (24 )
Stock-based compensation   (66 )   (94 )   (96 )   (95 )   (115 )   (155 )   (73 )   (43 )
Non-GAAP sales and marketing expense   3,691     3,250     3,478     3,830     4,260     4,546     5,457     6,205  
 
GAAP general & administrative expense 2,934 3,506 3,748 3,814 4,366 4,556 2,466 3,356
Transitional costs - - (760 ) (298 ) (105 ) (29 ) (132 ) -
Change in fair value of Blammo earnout - - 178 (117 ) (645 ) (386 ) 954 (90 )
Stock-based compensation   (231 )   (280 )   (386 )   (475 )   (461 )   (487 )   (437 )   (560 )
Non-GAAP general and administrative expense $ 2,703   $ 3,226   $ 2,780   $ 2,924   $ 3,155   $ 3,654   $ 2,851   $ 2,706  

               
 
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 December 31, 2012
 
GAAP net loss $ (3,172 ) $ (1,752 ) $ (6,158 ) $ (10,019 ) $ (6,841 ) $ (2,988 ) $ (3,563 ) $ (7,067 )
Change in deferred revenues and amortization of in-process development contracts 735 234 880 4,877 50 551 (188 ) (150 )
Change in deferred royalty expense 33 20 1 (99 ) 60 67 (30 ) (121 )
Amortization of intangible assets 817 703 2,705 2,047 1,248 1,427 1,520 1,568
Depreciation 427 406 470 543 562 556 554 696
Stock-based compensation 397 505 838 1,370 3,836 3,038 (2,878 ) 1,826
Change in fair value of Blammo earnout - - (178 ) 117 645 386 (954 ) 90
Transitional costs - - 981 326 173 30 192 94
Impairment of goodwill - - - - - - 3,613 -
Restructuring charge 490 147 - (92 ) - 320 213 838
Foreign currency exchange loss/(gain) (198 ) (363 ) (344 ) 116 373 (205 ) 460 (263 )
Interest and other (income)/expense, net 18 34 - (10 ) (7 ) (5 ) (5 ) (1 )
Income tax provision/(benefit)   774     501     (813 )   152     440     (2,019 )   (1,075 )   660  
Total Non-GAAP Adjusted EBITDA $ 321   $ 435   $ (1,618 ) $ (672 ) $ 539   $ 1,158   $ (2,141 ) $ (1,830 )




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