Glu Mobile Inc. (GLUU)

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Glu Mobile, Inc. (GLUU)

Q1 2019 Results Earnings Conference Call

May 6, 2019, 03:00 PM ET

Company Participants

Harman Singh - Vice President of Finance & Investor Relations

Nick Earl - President & Chief Executive Officer

Eric Ludwig - Chief Operating Officer & Chief Financial Officer

Conference Call Participants

Mike Olson - Piper Jaffray

Doug Creutz - Cowen and Company

Jeff Cohen - Stephens Inc.

Drew Crum - Stifel Nicolaus

Mike Hickey - Benchmark Company

Darren Aftahi - ROTH Capital Partners



Good day, ladies and gentlemen, and welcome to the First Quarter 2019 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 will follow given at that time. [Operator Instructions]. As a reminder, this conference call is being recorded.

I would now like to turn the call over to host, Harman Singh, Vice President, Finance and Investor Relations. You may begin, sir.

Harman Singh

Thank you, operator. Good afternoon everyone and thank you for joining us on Glu Mobile's first quarter 2019 earnings conference call. 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 release, 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 GAAP results and we encourage investors to consider all measures before making any investment decisions.

For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measure, and 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 the information aside from bookings or as otherwise stated below, 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 totals 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 file are now accessible on the website. We encourage you to follow along with the slides during this earnings conference call.

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

Nick Earl

Thanks, Harman. Hello and thank you for joining us for Glu's first quarter 2019 earnings call. I'll review highlights from a strong Q1 financial results and provide an update on our game development plans. Eric will then discuss our Q1 financial results in more detail as well as our second quarter and full-year guidance.

Following a record year for bookings and adjusted EBITDA profitability, Glu is off to a strong start in 2019. Total bookings were $92.6 million, 7% over last year's first quarter. The solid topline performance drove the fifth consecutive quarter of increased adjusted EBITDA profitability year-over-year.

In addition to reporting solid bookings increases in our three growth games, we have made great progress with WWE Universe, Diner DASH Adventures and Disney Sorcerer's Area and we expect all three to be globally live by August.

Design Home, Covet Fashion and the Tap Sports Baseball franchise collectively grew 30% year-over-year and contributed 78% to total bookings, up from 64% a year ago. This consistent performance reflects our solid execution against Glu's long-term strategy to build a more predictable business based on titles that grow bookings year-over-year.

Let's take a closer look at each game's performance compared to last year's first quarter. Design Home grew bookings 23% to $42.2 million. We introduce meta-features in April; and while still in the early stages, we're off to a fantastic start.

The strong KPIs that we saw for these features in beta testing indicate that the meta-game is likely to drive increased long-term retention and, in turn, higher LTV. We are confident that the meta-game rollout, combined with our internationalization efforts and e-commerce partnership will energize our player base and drive monetization.

In addition, Roomage, an international version of Design Home, developed by Cocone in Japan will launch this quarter. More to come as we see its performance in the coming months.

Covet Fashion had an outstanding quarter, which included the top three grossing days of its almost six-year life. Bookings grew 38% to $16.8 million, setting a new record. This growth was driven by a strong spring season launch, combined with several new merchandising strategies.

We are enhancing the game experience with a new user flow and increased depth of play with the launch of the prop shop this quarter. Later this year, we will be adding subscriptions, merchandising improvements and an enhanced social layer.

Read the rest of this transcript on seekingalpha.com