Glu Mobile, Inc. (GLUU)

8th Annual Citi US Small/Mid Cap Conference Call

November 16, 2011 1:15 PM ET

Executives

Niccolo de Masi – Chief Executive Officer

Analysts

Presentation

Niccolo de Masi

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Many of you may not be intimately familiar with Glu yet, but my aim is to make you all expert in the next 20 or 30 minutes. I’ll be pausing everyone for a while to show you few demos by video of our games, which I think, all of you will enjoy, because many of them are as yet not released.

So who is Glu? I’ll start there? We are trying to build, what we call a gaming company of tomorrow. We are focused on two big rising tides. The first is the growth in gaming on mobile devices. We define a mobile device to be anything from a tablet on down whether it’s an iPhone, an iPad, an Android device, all of that very much in a real house and we are actually the only North American listed business with the pure-play mobile gaming focused company.

Second big rising tide for us is the growth in the freemium business model. And the freemium business model, I’ll talk more about in the few slides, but fundamentally it’s about a free download model whereby we are getting players invested in our games over time and they then gradually pay for virtual goods, which allow them to accelerate their gameplay, as they get into the experience.

Management team was new at the start of 2010. I joined Glu January 4, 2010, and it’s my third mobile company. So before this I ran private competitor of Glu called Hands-On Mobile, before that I ran a public company in the U.K. called Monstermob Group PLC that did mobile music. So this is my third mobile company, second game company, second public company in the mobile space.

And I look back in the past 18 months or so, 20 months at Glu. When I got here, we were a business it’s been around for seven years predominately focused on older phone, the feature phone gaming space that you all maybe familiar with the few, had have downloaded a phone on your cell phone, it would have been an old Java Glu game and it would have been something pay for fun.

There were three big changes that we’ve set out to make when I joined. The first was to these developing games for feature phones. So we move rapidly to focus 100% of our development effort on smartphones. Very much playing the game, I’d like to put it but where the Torque, Torque is going I suppose to where it was.

We also looked at the same time to change our business model. We’ve seen the raise of free to play Anamosa in Asia, we’ve seen the rise of companies like Zynga Online and I believe that mobile was a next place the freemium business model would migrate. So we also start making games for the paid model and we started training ourselves on how to make the economy balance and work in this freemium model.

And the third we change was we stop licensing other people brand. So rather then paying a royalty and licensing the same brand or some other property, we recognized that the freemium business model provided us with the opportunity to build our own brands pretty quickly.

We launched our first freemium titles in October 2010, second batch in March 2011 and we have a bunch of great titles coming for this Q4 as well. In between there you can see we grew smartphone revenues at a handy clip between Q3 and Q4 2010, Q4 and Q1 2011, Q1 and Q2 2011.

We made a couple acquisitions, raised some financing, strengthen the balance sheet. So today Glu finished Q3 with $35, $36 million of net cash, which is up a long way from where it was at the start of 2010.

Take a moment to show you a couple of our biggest successes in the Q4 through Q2, namely Gun Bros and Contract Killer, which many of you may had played, if not I want to show you the style of gameplay that Glu has been building and succeeding with.

Things I would call out as you look at a couple of these are the high production values, visually rich games, often these are games for experience yield, you’ll only see on console platforms or PC. So we’ve had many of the first 3D games they were ever live on a mobile device and also the first freemium action-adventure title, Gun Bros was rated a pocket gamer, one of the top five most influential game of 2010 because it was the first freemium action-adventure game. You can also see we had Mini First, first title with Google in-app purchase launch and Android first title on Honeycomb.

So I’ll forward here, the Contract Killer, this has been one of our top two franchises as well. We found out with Deer Hunter that people like shooting deer in the head, but they preferred shooting other people on the head. So Contract Killer has been significantly more successful than many Glu titles. Again, you can see, what I call action-adventure high production values this title still going strong after six months or so.

So let me move now on what our market looks like and the growth opportunities that in front of us. Glu has been in the gaming space on mobile device system since started and for the first two years it very much look as if gaming on mobile devices was something which was for situation when you didn’t bring your PSP with you or your DS with you or you weren’t in front of your PC, didn’t have your console to hand.

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