Earnings: Glu Revenues Up 35 Percent

Glu Mobile has released its Q307 results, showing consolidated revenue of $16.7 million for the quarter, and increase of 35 percent year-on-year. The GAAP net loss in Q3 was $753,000, compared to a net loss of $3.8 million for Q306. Glu’s top ten titles accounted for about 59 percent of revenue in the quarter, up from 58 percent a year ago, and the average revenue per top ten title increased 38 percent to $980,000 compared to $711,000 in Q306. Glu (NSDQ: GLUU) saw strong growth in the Americas and renewed growth in Asia Pacific, but slower growth in some European countries. Glu expects its full year GAAP revenues to be between $66.4 million and $66.9 million, and its net loss is expected to be between $4.1 million and $4.5 million.

In the conference call Glu said that revenue came at the low end of guidance, but that results were at the high end due to continued operating discipline. It also expects consolidation in the mobile game market, and will look at making appropriate acquisitions in the future. For acquisitions it will look at companies that can provide geographic expansion, a smaller company that doesn’t have the scale of Glu but has franchises and brands it wants, and possibly to add ancilliary businesses. For example, Glu has started to do personalization content, and sees other companies doing itneresting stuff — but it was emphasized that such an aquisition would be carefully studied from a strategy viewpoint.

Europe: The slow down in Europe was put down to some carriers changing the way the manage the games on their portal for a number of reasons, as well as data charges which can double the cost of a game. This isn’t new, but it is “beginning to impact consumer behaviour”, which I interpret meaning that enough people have been burned that people are wary of data charges. “However, we also believe this should be a diminishing problem over time as European carriers adopt more of an all-you-can-eat style data plan. To be clear, Europe will grow next year, but of a lower starting point than we had originally expected. And we don’t anticipate reacceleration until we see these regional inconsistancies resolve themselves” said CEO Greg Ballard. In answer to questions, Glu said it lost a bit of marketshare in Germany and Italy and gained a bit in France, Russia and the Nordic countries. It also said that Gameloft (EPA: GFT) has done a bit better in Europe by releasing twice as many titles as any other competitor, but we’d have to wait to see whether that is economically viable.

The Gap Quarter: Glu also warned of a gap in their release schedule for the first quarter next year, created by the loss of the Hasbro brands. The company had expected other titles to take up the slack (such as Warner deals) but those won’t come until later in the year. Glu has four games in the pipeline with Warner, the first to be released in the second quarter along with a large movie.

Breakdown: Transformers has been Glu’s most successful game to date, and accounted for 11.5 percent of revenue in the quarter. The top four carrier customers accounted for 49 percent of revenue compared to 55 percent a year ago. Regionally, North America had 59 percent of Glu’s sales, EMEA had 30 percent and the rest of the world had 11 percent. All regions grew significantly year-over-year in absolute dollars.

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