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Glu Mobile Inc. (GLUU)

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Glu Mobile Inc. (GLUU)

Q2 2018 Earnings Conference Call

July 31, 2017 5:00 P.M. ET

Executives

Harman Singh - Vice President of Finance and Investor Relations

Nick Earl - President and Chief Executive Officer

Eric Ludwig - Chief Operating Officer and Chief Financial Officer

Analysts

Dillon Heslin - Roth Capital Partners

Mike Hickey - Benchmark Company

Doug Creutz - Cowen and Company

Drew Crum - Stifel

Presentation

Operator

Good day, ladies and gentlemen and welcome to the Q2 2018 Glu Mobile Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions for how to participate will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Harman Singh, Vice President of Finance and Investor Relations. Sir, you may begin.

Harman Singh

Thank you, operator. Good afternoon everyone and thank you for joining us on Glu Mobile's second quarter 2018 earnings conference call. Please note that our webcast providers network is currently down. We ask that you please reference Q2 2018 slides that are posted on our IR website. On the call today are Nick Earl, President and Chief Executive Officer; and Eric Ludwig, COO and Chief Financial Officer.

During this call, we will be making forward-looking statements regarding future events and the future financial performance of the company. Any forward-looking statements that we make today are based on assumptions that the company believes to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events.

We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements in the press releases and during this conference call. These risk factors are described more fully in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q.

During this call, we will present both GAAP and non-GAAP financial measures. The non-GAAP financial measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results and we encourage investors to consider all measures before making an investment decision. For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to the supplemental presentation accompanying today's earnings call that can be accessed via our investor website, www.glu.com/investors.

As a reminder, consistent with our financial presentation and for all of the information, aside from bookings or as otherwise stated, we will discuss results on a GAAP basis and refer you to changes in deferred revenue, the deferred cost of revenue and the non-GAAP operating expenses totaled in our financial tables. This data will provide a GAAP to non-GAAP reconciliation of the quarter's financial results based on the same methodology we’ve used in prior quarters.

We’re also providing a supplementary Excel file on our IR website to more easily aid in this reconciliation. Both the PowerPoint and Excel files are now accessible on the website. We encourage you to follow along with the slides during this earnings conference call.

And with that, I’d like to turn the call over to Nick.

Nick Earl

Thanks Harman. Hello everyone and thanks for joining us. I will begin the call today by reviewing our strong second quarter results and title highlights. I will then provide an update on our game development and growth strategies. Next, Eric will take a deep dive into the quarter's financial results and provide color on our outlook for Q3 and the full-year.

Q2 was a record-breaking quarter in which we achieved double digit year-over-year growth in bookings, adjusted EBITDA, adjusted EBITDA margin and free cash flow. These accomplishments were driven by strength in Design Home, Tap Sports Baseball, and Covet Fashion. By continuing to optimize our titles to agile development, monetization, and live operation strategies we generated record quarterly bookings of 99.4 million, an increase of 20% year-over-year, significantly exceeding our guidance.

We are also starting to scale our business with our adjusted EBITDA margin moving into the low double digits. Given our record first half results, we have raised our full-year outlook based on the second quarter guidance, our performance and our increased expectations for the remainder of the year.

We entered the second half of the year with strong momentum driven by our current growth and Evergreen titles setting us up for a record year, while positioning us for what we believe will be strong bookings and adjusted EBITDA margin growth next fiscal year.

As we have said, a few of our growth strategies are focused on developing and building a game portfolio of growth in Evergreen titles that are entertaining and engaging for our users and that deliver consistent repeatable bookings and provide strong operating leverage for our business. We believe our record second quarter results reflect this strategy.

Let me highlight some of the significant achievements in Q2 of 2018. Starting with our growth games, these titles have made huge strides in just a years’ time as the three games in our growth portfolio Design Home, Tap Sports Baseball, and Covet Fashion represented 76% of our total bookings in Q2, compared to 60% in the same period a year ago.

Design Home, our top performer continued its phenomenal growth with record quarterly bookings of 38.2 million, representing growth of 70% year-over-year and 11% quarter-over-quarter. The strength was driven by upgrades to in-game merchandising, new user flow, and a strong performance of our monthly series, daily events, and periodic bundle pack sales.

Read the rest of this transcript on seekingalpha.com