9.13.12 g9 think equity growth conference presentation
Upcoming SlideShare
Loading in...5
×
 

9.13.12 g9 think equity growth conference presentation

on

  • 510 views

 

Statistics

Views

Total Views
510
Views on SlideShare
510
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

9.13.12 g9 think equity growth conference presentation 9.13.12 g9 think equity growth conference presentation Presentation Transcript

  • Glu Mobile Eric R. Ludwig: EVP & CFO September 13, 2012 Think Equity 9th Annual Growth Conference© Glu Mobile Inc. – Proprietary
  • Safe-Harbor StatementThis presentation contains "forward-looking" statements including those regarding: the projected growth rateof the mobile game market; the expected benefits of our acquisition of GameSpy, including with respect toour long-term LTV; the number of freemium games that we expect to launch in the second half of 2012; whenwe expect our development teams to release their first products; our guidance for the third quarter of 2012and the full fiscal year, and our target non-GAAP operating model. These forward-looking statements aresubject to material risks and uncertainties that could cause actual results to differ materially from those in theforward-looking statements. Investors should consider important risk factors, which include: the risk that Gluwill be unable to successfully integrate the companies that it acquired in August 2011, Griptonite andBlammo Games, and its employees and achieve expected synergies, the risk that Glu will have difficultyretaining key employees of the acquired companies; the risk that consumer demand for smartphones, tabletsand next-generation platforms does not grow as significantly as we anticipate or that we will be unable tocapitalize on any such growth; the risk that we do not realize a sufficient return on our investment withrespect to our efforts to develop freemium games for smartphones and tablets, the risk that we do notmaintain our good relationships with Apple and Google; the risk that our development expenses for gamesfor smartphones are greater than we anticipate; the risk that our recently and newly launched games are lesspopular than anticipated; the risk that our newly released games will be of a quality less than desired byreviewers and consumers; the risk that the mobile games market, particularly with respect to social,freemium gaming, is smaller than anticipated; and other risks detailed under the caption "Risk Factors" in ourForm 10-Q filed with the Securities and Exchange Commission on August 9, 2012 and our other SEC filings.You can locate these reports through our website at http://www.glu.com/investors.These "forward-looking" statements are based on estimates and information available to us on August 2,2012 and we are under no obligation, and expressly disclaim any obligation, to update or alter our forward-looking statements whether as a result of new information, future events or otherwise. © Glu Mobile Inc. – Proprietary Page 2
  • Use of Non-GAAP Financial MeasuresGlu uses in this presentation certain non-GAAP measures of financial performance. The presentation of these non-GAAP financialmeasures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information preparedand presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Inaddition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Glus results ofoperations as determined in accordance with GAAP. The non-GAAP financial measures used by Glu include non-GAAP revenues,non-GAAP smartphone revenues, non-GAAP freemium revenues, non-GAAP gross margins, non-GAAP operating margin, non-GAAP Profit/(Loss) and Adjusted EBITDA. These non-GAAP financial measures exclude the following items from Glus unauditedconsolidated statements of operations:• Change in deferred revenues and royalties;• Amortization of in-process development contracts;• Amortization of intangible assets;• Stock-based compensation expense;• Restructuring charges;• Change in fair value of Blammo earnout;• Transitional costs;• Release of tax liabilities; and• Foreign currency exchange gains and losses primarily related to the revaluation of assets and liabilities.In addition, Glu has included in this presentation “Adjusted EBITDA” figures which are used to evaluate Glu’s operatingperformance and is defined as non-GAAP operating income/(loss) excluding depreciation.Glu believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures,provide meaningful supplemental information regarding Glus performance by excluding certain items that may not be indicative ofGlus core business, operating results or future outlook. Glus management uses, and believes that investors benefit from referringto, these non-GAAP financial measures in assessing Glus operating results, as well as when planning, forecasting and analyzingfuture periods. These non-GAAP financial measures also facilitate comparisons of Glus performance to prior periods.For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, pleaserefer to the tables attached to Glu’s earnings press release for the quarter ended June 30, 2012, which is available on our websiteat http://www.glu.com/investors. © Glu Mobile Inc. – Proprietary Page 3
  • Growth Opportunity© Glu Mobile Inc. – Proprietary
  • Leading Freemium Social Mobile Gaming Company Intersection of Two Rising Tides: 1) Growth in gaming on mobile devices 2) Growth in freemium gaming© Glu Mobile Inc. – Proprietary Page 5
  • Evolution of Mobile Gaming Now Compelling to Mass Market•Featurephone focus •Smartphone focus•Branded IP/71% gross margin •Original IP/90% gross margin•Titles are packaged goods •Persistent titles•Premium pricing •Freemium with virtual goods•No community/social •Games are social© Glu Mobile Inc. – Proprietary Page 6
  • Smartphone Inflection Point • Very early in smartphone upgrade cycle globally Global Smartphone vs. Mobile Phone Subscriptions, Q411 7,000 6.1B Mobile Phone Subscriptions 6,000 Global Subscriptions (MM) 5,000 4,000 3,000 1.0B 2,000 Smartphone Subscriptions 1,000 - Smartphone Mobile Phone© Glu Mobile Inc. – Proprietary ‘Internet Trends’ Presentation at the D10 conference by Mary Meeker, Kleiner Perkins Caufield Byers; 5/30/2012 Page 7
  • Market growth projected at 36% per year• Mobile Game Market expected to grow by nearly 5x between 2010 and 2015 Estimated Global Mobile Game Market (Ichiyoshi Securities - WSJ 6/14/2012) ($ billion) 20 15 10 17.6 5 3.8 - 2010 2011 2012 2013 2014 2015© Glu Mobile Inc. – Proprietary Page 8
  • More Sustainable Growth Dynamics in Mobile Facebook Web Mobile Tablet Cannibalizing Raising average ARPDAU Impact DistributionConcentrationMarket Share Leader ~50% Leader <10%Concentration Client ~10MB 10MB - 300MB Size Distribution Storefront featuring Cross promotion Dynamic ConsumerFragmentation PayingDemographic Casual, female Everyone © Glu Mobile Inc. – Proprietary Page 9
  • Glu Tightly Aligned with Ecosystem •IAP •Beam Technology •Subscriptions •APK Integration •Universal currencyNew Devices at Launch Quality Pipeline90%+ Featuring Track Record © Glu Mobile Inc. – Proprietary Page 10
  • M&A© Glu Mobile Inc. – Proprietary Page 11
  • Gamespy Technology Robust database back-end allowing: 1. Multiplayer matchmaking 2. Statistic & leaderboards 3. Asynchronous PVP 4. Cloud stores & UGC 5. Friends and gifting 6. Text & voice chat • Operating since 1997, licensing since 2000 • Integrated in over 1,000 games worldwide© Glu Mobile Inc. – Proprietary Page 12
  • Gamespy FAQ • 13 new employees • Highly scalable cluster-based architecture • Supporting more DAU a matter of adding hardware • With database optimizations will support ‘full MMO experience’© Glu Mobile Inc. – Proprietary Page 13
  • Expect to be Long-Term LTV Positive LTV ($)• Willingness to invest drives LTV Potential to be 2x-3x Current• Other players are critical driver of willingness• Build from Gun Bros community success Source: Glu internal estimates Page 14 © Glu Mobile Inc. – Proprietary
  • Recent M&A Record GameSpy • Add 11 • Dominate Add industry- development sports • Long-term leading teams hunting Rationale LTV casual • Scale global gaming enhancer expertise product • Efficient use pipeline of capital • 6.1m total Earnout to shares Price max 4.3m • Balance $5m cash 0.6m shares shares sheet $10m net cash • Integrated in $1.4m Q2/12 numerous Early results royalties H2/12 saved launches© Glu Mobile Inc. – Proprietary Page 15
  • Corporate Overview© Glu Mobile Inc. – Proprietary
  • Corporate Overview Moscow Seattle Toronto San Francisco Beijing Hyderabad Sao Paolo • 11 years of mobile gaming experience • Nearly 700 employees and full-time contractors • 24 development teams • 7 offices worldwide • Global revenue footprint • Est. $95mm non-GAAP revenue in 2012 • 8 titles have reached Top 10 Grossing* • 23 titles in Top 200 Grossing*© Glu Mobile Inc. – Proprietary * - App Annie iOS rankings reports 9/1/2009 - 7/26/2012 Page 17
  • Evolution of Glu Mobile Acquisition of Acquisition of Second batch of GameSpy Acquisition of Deer Hunter freemium products Tecnologies Griptonite & Brand launched Blammo First 2nd generation freemium freemium titles products $15.9m Freemium, launched raised social,original IP &smartphone focus $13.5m raised Q211 Q311 Q411 Q112 Q212Non-GAAP smartphone revenue: $9.7M $10.5M $15.0M $17.4M $20.4MIncrease from prior quarter: 43% 9% 42% 17% 17% © Glu Mobile Inc. – Proprietary Page 18
  • Platform Transition Momentum (all figures non-GAAP) 35 Featurephone Rev Smartphone Rev 30Non-GAAP Revenue ($mm) 25 20 15 10 5 - Q312 Q412 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Guidance Guidance High HighTotal Rev Growth Y/Y 31% 45% 44% 19% 4% (14%) (13%) (3%) (18%) (22%) (26%) (26%) (2%) 13% 16% 29% 26% 35% 19% 46%Smartphone Rev Growth Y/Y 277% 274% 103% 72% 218% 334% 326% 340% 158% 111% 76% 84%Featurephone Rev 21 24 24 22 21 20 20 19 15 14 13 12 10 8 7 5 4 4 3 2Smartphone Rev - - - - 1 1 1 2 2 2 2 3 7 10 11 15 17 20 19 28 Launch of first 85% freemium smartphone products revenues © Glu Mobile Inc. – Proprietary Page 19
  • Original IP* Successes100%75%50%25% +9 0% 2H10 1H11 2H11 1H12 2H12 Original IP Success Rate Original IP Failure Rate © Glu Mobile Inc. – Proprietary * - includes Deer Hunter License purchase as original content Page 20
  • 100% Original IP and GM % 95% 89% 90% Total Glu Original IP % Smartphone Original IP % 86% 83% OrigIP % of GAAP/Non-GAAP Revenue 80% 75% 73% 73% 68% 70% 60% 53% 48% 49% 50% 40% 34% 35% 28% 28% 26% 30% 24% 23% 22% 23% 20% 21% 21% 20% 19% 20% 14% 12% 11% 11% 10% Q110 Q211 Q311 Q411 Q112 Q111 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q210 Q310 Q410 Q212 95% GM% w/o impairments & amortization of intangibles 91% 90% 88%Total Glu GAAP/Non-GAAP GM% 87% 85% 83% 81% 80% 78% 77% 76% 76% 75% 75% 73% 73% 72% 73% 73% 72% 73% 74% 73% 73% 72% 71% 70% Q110 Q211 Q311 Q411 Q112 Q111 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q210 Q310 Q410 Q212© Glu Mobile Inc. – Proprietary Note: Q107-Q410 figures are GAAP. All figures for Q111 and later are non-GAAP Page 21
  • Subscription Billing on AndroidGlu first to launch subscriptionsand universal currency:• Universal Glu Credit currency across Glu games• $2–$20 per month VIP Clubs• Bonus Glu Credits• Monthly sweepstakes for prizes © Glu Mobile Inc. – Proprietary Page 22
  • Glu has leading market share on rapidly growing, fragmented Android platform iOS Android OS’s SocialNetworks OEMsStorefronts © Glu Mobile Inc. – Proprietary Page 23
  • Public Company Leadership Top 50 Top 100 4 6 3 8 No. Titles 3 6 Top 2 4 0 3 Grossing* 0 0 0 0 *U.S. Google Play 0 0 Games Category 7/26/12© Glu Mobile Inc. – Proprietary on Samsung Galaxy S III Page 24
  • Cumulative Installs • 46mm downloads in Q212 Cumulative Installs (Lifetime) (in 000s) 300,000 276,995 231,063 200,000 176,054 131,320 101,934 100,000 70,174 - Q111 Q211 Q311 Q411 Q112 Q212© Glu Mobile Inc. – Proprietary Page 25
  • Continued growth in user metrics • DAU growth due to releases of new titles • DAU/MAU ratio is improving, signaling better player retention Monthly Active Users (MAU) (In 000s) Daily Active Users (Average DAU) (In 000s) MAU DAU/MAU % DAU40,000 20% 4,000 3,411 31,363 3,218 29,814 29,075 2,87330,000 15% 3,000 22,090 2,10320,000 10% 2,000 16,517 1,639 11,88210,000 5% 953 1,000 - 0% - Q111 Q211 Q311 Q411 Q112 Q212 Q111 Q211 Q311 Q411 Q112 Q212 MAU DAU/MAU %Note: MAU/DAU calculation methodology was changed in Q411 to more accurately reflect the user metrics which had the effect of increasing our Q411 MAU/DAU by less than 5% from what itwould have been under our previous methodology. This change affects the comparability of Q411, Q112, and Q212 MAU/DAU data to prior quarters. © Glu Mobile Inc. – Proprietary Page 26
  • June 2012 Conversion Metrics* % MAU Paying ARPDAU** DAU 3.9% 13.2¢ 74k 3.4% 8.9¢ 271k 1.0% 8.5¢ 114k 1.2% 8.3¢ 78k 1.0% 8.1¢ 261k 0.6% 6.1¢ 107k Average*** 1.7% 8.5¢*All metrics are average for the month. Efforts were taken to remove jailbroken and hacked transactions from calculation – including detecting whichdevices had purchases come through a jailbroken OS, how much & how often players made IAPs. All numbers are for English, iOS SKUs only.**Calculation includes revenue from all sources (not only IAP).*** Average includes titles on this page only: Stardom, DH:R, Gun Bros, CKZ, Frontline Commando, CK. © Glu Mobile Inc. – Proprietary Page 27
  • Demo: 2H12 Casual Titles© Glu Mobile Inc. – Proprietary
  • Demo: 2H12 Action/Adventure Titles© Glu Mobile Inc. – Proprietary
  • Financials© Glu Mobile Inc. – Proprietary
  • Doubled Development Capacity 600 24 product dev teams Revenue impact from doubling 500 capacity 400 +R&D Headcount 12 product dev teams 300 200 100 0 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 # of teams yet to launch their 1st title: 13 12 10 4 0 © Glu Mobile Inc. – Proprietary Page 31
  • Smartphone Revenue Momentum• Q212 non-GAAP Smartphone Revenue at 85% of total, up from 81% in Q112 30 Featurephone Rev Smartphone Rev 25 $24.2 Non-GAAP Revenue ($mm) $21.6 $20.1 20 $20.4 $17.5 $17.9 $17.8 $17.2 $15.9 $15.5 $17.4 $15.3 15 $15.0 10 $10.5 $9.7 $6.7 5 $3.4 $2.1 $2.2 $2.5 - (in millions of dollars) Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 © Glu Mobile Inc. – Proprietary Page 32
  • Non-GAAP Smartphone Revenue Mix ($M) non-GAAP Revenue by Platform 25 20 30% 15 28% All Other 29% Android iOS 10 64% 67% 14% 34% 65% 5 71% 47% 74% Q111 Q211 Q311 Q411 Q112 Q212 ($M) non-GAAP Revenue by category 25 Premium 20 13% Offers & Incented Ads 15 18% Non-Incented Ads 10 63% in-App Purchases (incl. freemium preloads) 5 Q111 Q211 Q311 Q411 Q112 Q212© Glu Mobile Inc. – Proprietary Page 33
  • Studio capacity investment suppressed EBITDA in 2H11 ($K) 1,500 1,000 500 - Q111 Q211 Q311 Q411 Q112 Q212 (500) (1,000) (1,500) (2,000) Acquired Blammo & Grip (in millions of dollars)© Glu Mobile Inc. – Proprietary Page 34
  • Q212 Financial Results Summary (non-GAAP)($ in millions) Q212 Q112 Q/Q Q211 Y/Y Featurephone Revenue 3.7 4.2 -10% 8.2 -55% Smartphone Revenue 20.4 17.4 17% 9.7 111%Total Revenue 24.2 21.6 12% 17.9 35%Gross Margin 22.1 19.1 16% 14.8 49%Gross Margin % 91% 88% 300 bp 83% 875 bpOperating Expense 21.5 19.1 12% 14.8 45%Operating Income/(Loss) 0.6 (0.0) 0.0Adjusted EBITDA 1.2 0.5 115% 0.4 166%© Glu Mobile Inc. – Proprietary Page 35
  • Maintaining Strong Balance Sheet ($ in millions) Q212 Q112 Q211 Cash and cash equivalents 24.5 28.9 26.4 Accounts receivable, net 14.0 14.2 12.4 Prepaid expenses, royalties and other current assets 0.2 0.4 0.7 Other Assets 6.6 5.9 5.9 Intangible Assets & Goodwill 34.5 30.9 12.2 Total Assets 79.8 80.3 57.6 Accounts payable and accrued liabilities 8.3 8.0 8.0 Accrued expenses and royalties 21.3 20.5 17.9 Deferred revenue 7.7 7.2 1.8 Common Stock/Paid in Capital 264.2 262.9 224.7 Accumulated deficit & other comprehensive income (221.7) (218.3) (194.8) Total Liabilities and Stockholders’ Equity 79.8 80.3 57.6© Glu Mobile Inc. – Proprietary Page 36
  • Q212 & 2012 Guidance and Long Term Model© Glu Mobile Inc. – Proprietary
  • Annual Non-GAAP Revenue Featurephone Rev Smartphone Rev 120 100 95.4 89.8 83.7Revenue ($mm) 80 72.9 66.9 64.3 60 46.2 40 25.7 20 7.0 1.8 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Guidance Midpoint © Glu Mobile Inc. – Proprietary Page 38
  • August 2, 2012: Q312 Guidance (non-GAAP) ($ in millions, except EPS) Q212 Q312 Q312 Actual Guidance Guidance Low Hi h High Featurephone Revenue 3.7 2.75 2.75 Smartphone Revenue 20.4 17.50 18.50 Total Revenue 24.2 20.25 21.25 Gross Margin (%) 91% 89% 89% Operating Expense 21.5 22.6 22.6 Operating Income/(Loss) 0.6 (4.6) (3.7) Depreciation Addback 0.6 0.6 0.6 Adjusted EBITDA 1.2 (4.0) (3.1) Net Income/(Loss) 0.2 (4.8) (3.9) Basic Shares 63.8 64.5 64.5 Earnings/(Loss) Per Basic Share $0.00 ($0.07) ($0.06) Cash Balance 24.5 21.0© Glu Mobile Inc. – Proprietary Page 39
  • 2012 Full Year Guidance (non-GAAP) ($ in millions) 5/2/12 Guidance 8/2/12 Guidance Low High Low High Featurephone Revenue 10.2 10.2 12.5 12.5 Smartphone Revenue 76.5 81.5 81.9 83.9 Total Revenue 86.7 91.7 94.4 96.4 Operating Income/(Loss) Break-even Q412 Profitable Q412 Adjusted EBITDA Profitable Q412 Full-year profitable Basic Shares (millions) 64.0 64.2 Cash balance Cash break-even from Cash positive from operations Q412 operations Q412 $18mm and no debt $21mm and no debt© Glu Mobile Inc. – Proprietary Page 40
  • Target Operating Model (Non-GAAP) • Significant leverage expected after hitting break-even Long-Term 2011 Q112 Q212 Target Gross Margin 82% 88% 91% 90% R&D 51% 54% 55% 36-40% Sales & Marketing 20% 20% 19% 18-19% G&A 16% 15% 15% 10-11% Operating Margin (5)% 0% 3% 20-25% Adjusted EBITDA (2)% 3% 5% 22-26%• Note: gross margin excludes amortization of intangible assets. R&D, S&M and G&A exclude stock based-compensation expense. Operating margin excludes amortization of intangible assets, restructuring and transitional expenses and stock-based compensation expense. Adjusted EBITDA is Non-GAAP Operating Margin excluding depreciation expense. © Glu Mobile Inc. – Proprietary Page 41
  • Key Statistics Market Statistics (as of July 31, 2012) (in millions except per share and volume data) Stock Price $4.80 52 Week High $5.90 52 Week Low $1.80 Basic Shares Outstanding 63.8 Avg. Daily Volume (last 90 days) 2,824,680 Market Capitalization $306.2 Debt $0 Cash* $24.5 Enterprise Value $281.7 * Cash balance as of 6/30/2012© Glu Mobile Inc. – Proprietary Page 42
  • Key Operating Metrics • Detailed figures referred to in the 8/2/2012 earnings call, CFO script: (All Revenue figures are non-GAAP) Q111 Q211 Q311 Q411 Q112 Q212 Freemium Smartphone Revenue (in thousands) $4,674 $7,659 $8,142 $13,480 $15,979 $19,233 Premium Smartphone Revenue (in thousands) $2,072 $2,008 $2,390 $1,479 $1,457 $1,212 Sub-total Smartphone Revenue (in thousands) $6,746 $9,667 $10,532 $14,959 $17,436 $20,445 Featurephone Revenue (in thousands) $10,415 $8,247 $7,253 $5,092 $4,158 $3,727 Total Revenue (in thousands) $17,161 $17,914 $17,785 $20,051 $21,594 $24,172 Freemium Smarthphone Revenue Growth Q/Q 263% 64% 6% 66% 19% 20% Freemium Smartphone Revenue % of Total Smartphone Revenue 69% 79% 77% 90% 92% 94% Smartphone Revenue Growth Y/Y 218% 334% 326% 340% 158% 111% Smartphone Revenue % of total 39% 54% 59% 75% 81% 85% Original IP % of total non-GAAP Revenues 35% 49% 53% 68% 75% 83% Original IP % of Smartphone non-GAAP Revenues 48% 73% 73% 86% 89% 95% Daily Active Users (DAU)* (in millions) 1.0 1.6 2.1 2.9 3.2 3.4 Monthly Active Users (MAU)* (in millions) 11.9 16.5 22.1 31.4 29.8 29.1 Installs (in millions) 20.0 31.8 29.4 44.7 55.0 45.9 Cumulative Installs (in millions) 70.2 101.9 131.3 176.1 231.1 277.0 In-App Purchase billable transactions (in thousands) 755 999 866 1,522 2,489 2,499 Average Revenue per billable transaction $2.21 $4.07 $6.40 $5.79 $4.71 $5.06 non-GAAP Operating Expenses (in thousands) $13,459 $14,783 $16,490 $18,590 $19,119 $21,500 Adjusted EBITDA (in thousands) $321 $435 ($1,618) ($672) $539 $1,158 Headcount (at quarter-end) 381 379 581 585 610 644 *DAU/MAU reflects the DAU/MAU for the last month of the quarter© Glu Mobile Inc. – Proprietary Page 43
  • Glu Mobile: Investment Overview • Leading freemium mobile gaming company • Original IP titles driving gross margin improvements • Acquired two companies to approximately double development capacity© Glu Mobile Inc. – Proprietary Page 44