Glu Mobile Inc. (NASDAQ:GLUU), a leading global publisher of
social games for smartphone and tablet devices, today announced
financial results for its third quarter ended September 30,
2010.
For the quarter ended September 30, 2010, Glu reported revenues
of $15.5 million compared to $19.6 million in the third quarter of
2009. GAAP loss from operations and net loss were $(1.2) million
and $(1.6) million, respectively, for the quarter ended September
30, 2010 compared to GAAP loss from operations and net loss of
$(2.8) million and $(4.0) million, respectively, in the third
quarter of 2009. GAAP loss per basic common share was $(0.04) for
the quarter ended September 30, 2010 compared with a GAAP loss per
basic common share of $(0.13) in the same period last year. GAAP
net loss for the third quarter of 2010 included $177,000 in foreign
exchange gains compared to $(28,000) in foreign exchange losses
last year.
For the quarter ended September 30, 2010, non-GAAP income from
operations, which excludes stock-based compensation expense,
amortization of intangibles arising from business combinations,
restructuring charges and MIG earnout expenses, was $232,000
compared to $300,000 of non-GAAP income from operations in the same
period last year. Non-GAAP net loss, which excludes foreign
currency exchange gains and losses primarily related to the
revaluation of assets and liabilities, was $(363,000) for the
quarter ended September 30, 2010 compared to non-GAAP net loss of
$(889,000) in the same period last year. Non-GAAP basic loss per
share was $(0.01) for the quarter ended September 30, 2010 compared
to non-GAAP basic net loss per share of $(0.03) in the same period
last year. Excluding non-cash royalty impairments of $513,000 in
the quarter ended September 30, 2009, non-GAAP net loss would have
been $(376,000) in the quarter ended September 30, 2009 or $(0.01)
per basic common share.
The Company achieved positive cash flows from operations for the
sixth consecutive quarter, generating $389,000 in cash from
operations during the third quarter of 2010. Glu ended the quarter
with cash and cash equivalents of $15.9 million while reducing its
draw down on its line of credit to $1.6 million. The Company’s cash
and cash equivalents balance reflects the $13.5 million private
placement that closed in the third quarter of 2010.
“We are confident that our new product strategy will gain
traction in the coming quarters, as we continue to make progress in
repositioning the business,” stated Niccolo de Masi, Chief
Executive Officer of Glu. “During the third quarter, we were able
to sequentially grow smartphone revenues by 12%, micro-transactions
and in-game advertising by 98% as well as monthly active users by
15%. With our goal of launching five to six new social, persistent
titles every quarter beginning in the fourth quarter of 2010, I am
cautiously optimistic that our smartphone and tablet revenue growth
will accelerate in 2011.”
A reconciliation of GAAP to non-GAAP results has been provided
in the financial statement tables included in this press release.
An explanation of these measures is also included below under the
heading “Non-GAAP Financial Measures.”
“I am once again pleased with our ability to maintain breakeven
or better cash flow from operations for the sixth consecutive
quarter, especially during this transition period,” stated Eric R.
Ludwig, Glu’s Chief Financial Officer. “While we continue to
carefully manage costs, we expect to increase our investments in
marketing to support the launch of our new products during the
fourth quarter of 2010. With a significantly strengthened balance
sheet, I am confident that Glu is in position to successfully
implement its strategy.”
“We are delighted to announce that Ben T. Smith, IV, a pioneer
in the freemium mobile gaming space, has joined our Board effective
today,” stated Bill Miller, Chairman of Glu. “Ben was one of the
earliest investors in Tapulous and provided leadership to its Board
through its sale to the Walt Disney Company earlier this year. He
is also an investor and Board member in a number of other social
platforms including having co-founded MerchantCircle and Spoke
Software. We look forward to benefiting from his insights and
support.”
Business Outlook
The following forward-looking statements reflect expectations as
of November 2, 2010. Results may be materially different and are
affected by many factors, such as: consumer demand for mobile
entertainment and specifically Glu’s mobile products; consumer
demand for mobile handsets, including the next-generation
platforms; carriers' and distributors' marketing to consumers,
including premium deck placement; continued uncertainty in the
global economic environment; carriers' and other distributors’
maintaining their networks and provisioning systems to enable
consumer purchases; development delays on Glu's products;
competition in the industry; changes in foreign exchange rates;
Glu's effective tax rate and other factors detailed in this release
and in Glu's SEC filings.
Fourth Quarter Expectations – Quarter Ending December 31,
2010:
- GAAP revenue is expected to be between
$14.0 million and $14.5 million.
- GAAP net loss is expected to be between
$(7.0) million and $(7.4) million, or a net loss of between $(0.16)
and $(0.17) per basic share.
- Non-GAAP operating loss is expected to
be between $(3.0) million and $(3.3) million.
- Non-GAAP net loss is expected to be
between $(3.4) million and $(3.7) million, or a net loss of $(0.08)
per basic share, which excludes $1.0 million for amortization of
intangibles, approximately $370,000 of anticipated stock-based
compensation expense and approximately $2.3 million of anticipated
restructuring charges primarily related to the planned relocation
of our corporate offices to San Francisco, planned headcount
reductions in EMEA and costs associated with the transition of our
former General Counsel.
- Our income tax expense in the fourth
quarter of 2010 is expected to be approximately $388,000.
- Weighted average common shares
outstanding for the fourth quarter of 2010 are expected to be
approximately 44.6 million basic and 45.3 million diluted.
Full Year Expectations – Year Ending December 31,
2010:
- GAAP revenue is expected to be between
$62.7 million and $63.2 million.
- GAAP net loss is expected to be between
$(15.5) million and $(15.9) million, or a net loss of between
$(0.44) and $(0.45) per basic share.
- Non-GAAP operating loss is expected to
be between $(3.4) million and $(3.8) million.
- Non-GAAP net loss is expected to be
between $(5.4) million and $(5.7) million, or a net loss of $(0.15)
to $(0.16) per basic share, which excludes $4.4 million for
amortization of intangibles, approximately $1.6 million of
anticipated stock-based compensation expense and approximately $3.5
million of anticipated restructuring charges.
- Our income tax expense for the full
year is expected to be approximately $1.4 million.
- Weighted average common shares
outstanding for the year ending December 31, 2010 are expected to
be approximately 35.4 million basic and 35.8 million diluted.
Quarterly Conference Call
Glu will discuss its quarterly results via teleconference today
at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Please dial
(877) 311-0653, or if outside the U.S., (702) 928-6877, with
conference ID # 87600146, to access the conference call at least
five minutes prior to the 1:30 p.m. Pacific Time start time. A live
webcast and replay of the call will also be available at
http://www.glu.com/investors under the Investor Calendar and
Webcasts menu. An audio replay will be available between 2:30 p.m.
Pacific Time, November 2, 2010, and 8:59 p.m. Pacific Time,
November 9, 2010, by calling (800) 642-1687, or (706) 645-9291,
with conference ID #87600146.
Use of Non-GAAP Financial Measures
To supplement Glu's unaudited condensed consolidated financial
statements presented in accordance with GAAP, Glu uses certain
non-GAAP measures of financial performance. The presentation of
these non-GAAP financial measures is not intended to be considered
in isolation from, as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP, and may be different from non-GAAP financial measures used by
other companies. In addition, these non-GAAP measures have
limitations in that they do not reflect all of the amounts
associated with Glu's results of operations as determined in
accordance with GAAP. The non-GAAP financial measures used by Glu
include historical and estimated non-GAAP operating income/(loss),
non-GAAP net income/(loss) and non-GAAP basic and diluted net
income/(loss) per share. These non-GAAP financial measures exclude
the following items from Glu's unaudited consolidated statements of
operations:
- Amortization of intangible assets;
- Stock-based compensation expense;
- Restructuring charges;
- MIG earnout expenses; and
- Foreign currency exchange gains and
losses primarily related to the revaluation of assets and
liabilities.
Glu may consider whether other significant non-recurring items
that arise in the future should also be excluded in calculating the
non-GAAP financial measures it uses.
Glu believes that these non-GAAP financial measures, when taken
together with the corresponding GAAP financial measures, provide
meaningful supplemental information regarding Glu's performance by
excluding certain items that may not be indicative of Glu's core
business, operating results or future outlook. Glu's management
uses, and believes that investors benefit from referring to, these
non-GAAP financial measures in assessing Glu's operating results,
as well as when planning, forecasting and analyzing future periods.
These non-GAAP financial measures also facilitate comparisons of
Glu's performance to prior periods.
Cautions Regarding Forward-Looking Statements
This news release contains forward-looking statements, including
those regarding our "Business Outlook" ("Fourth Quarter
Expectations – Quarter Ending December 31, 2010" and “Full Year
Expectations - Year Ending December 31, 2010”); our belief that our
new product strategy will gain traction in the coming quarters; our
belief that we are continuing to make progress in repositioning our
business; our goal of launching five to six new social, persistent
titles every quarter beginning in the fourth quarter of 2010; our
expectation that our smartphone and tablet revenue growth will
accelerate in 2011; our intention to increase our investments in
marketing to support the launch of our new products during the
fourth quarter of 2010; our belief that Glu is in position to
successfully implement its strategy and our expectation that we
will benefit from the insights and support of Ben T. Smith, IV as
one of our Board members. These forward-looking statements are
subject to material risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements. Investors should consider important risk factors, which
include: the risks identified under "Business Outlook"; the risk
that growth of smartphones and advanced networks does not grow as
significantly as we anticipate or that we will be unable to
capitalize on any such growth; the risk that our expense control
initiatives will be insufficient to enable us to profitably compete
in the market; the risk that we may have insufficient working
capital to effectively execute our business strategy, including
expanding our smartphone studio capacity and focusing on our
social, persistent product strategy, while continuing to address
our traditional carrier-based business, and that, even if we do
execute our business strategy, we may not derive the revenues that
we expect; the risk that we may fall out of compliance with the
financial and other covenants in our credit facility; the risk that
we may lose a key intellectual property license or key carrier
distribution agreement; the risk that our development expenses for
games for smartphones are greater than we anticipate; the risk that
our recently and newly launched games are less popular than
anticipated; the risk that changes in wireless carrier plans with
their customers may adversely impact sales of our games; the risk
that sales of our original intellectual property titles will not
continue to favorably impact product mix; the risk that our newly
released games will be of a quality less than desired by reviewers
and consumers; the risk that the mobile games market, particularly
with respect to social, persistent gaming, is smaller than
anticipated; and other risks detailed under the caption "Risk
Factors" in our Form 10-Q filed with the Securities and Exchange
Commission on August 9, 2010 and our other SEC filings. You can
locate these reports through our website at
http://www.glu.com/investors. 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.
About Glu Mobile
Glu Mobile (NASDAQ:GLUU) is a leading global publisher of social
games for smartphone and tablet devices. Glu's unique technology
platform enables its titles to be accessible to a broad audience of
consumers all over the world - supporting iOS, Android, Palm,
Windows Phone 7 devices and beyond. Glu is focused on bringing the
best in social, freemium, cross-platform mobile gaming experiences
to the mass market. Founded in 2001, Glu is headquartered in the
San Francisco Bay Area and has major offices in Brazil, China,
Russia and the UK. Glu is focused on creating compelling original
IP and also partners with leading entertainment brands including
Activision, Atari, Fox and Harrah's. Consumers can find
high-quality, fresh entertainment created exclusively for their
mobile devices wherever they see the 'g' character logo or at
www.glu.com. For live updates, please follow Glu via Twitter at
www.twitter.com/glumobile or become a Glu fan at
Facebook.com/glumobile.
GLU, GLU MOBILE and the 'g' character logo are trademarks of Glu
Mobile Inc.
In the financial tables below, Glu has provided a reconciliation
of the most comparable GAAP financial measure to each of the
historical non-GAAP financial measures used in this press
release.
Glu Mobile Inc. Consolidated Balance Sheets (in
thousands) (unaudited) September
30, December 31, 2010 2009
ASSETS Cash and cash equivalents $ 15,889 $ 10,510 Accounts
receivable, net 9,872 16,030 Prepaid royalties 3,169 6,738 Prepaid
expenses and other current assets 2,777 2,520
Total current assets 31,707 35,798 Property
and equipment, net 2,314 3,344 Other long-term assets 1,062 929
Intangible assets, net 9,759 13,059 Goodwill 4,704
4,608
Total assets $ 49,546 $ 57,738
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts
payable $ 3,763 $ 4,480 Accrued liabilities 878 817 Accrued
compensation 3,895 1,829 Accrued royalties 8,182 12,604 Accrued
restructuring 821 1,406 Deferred revenues 972 914 Current portion
of long-term debt 4,682 16,379
Total
current liabilities 23,193 38,429 Other long-term liabilities
7,866 7,616
Total liabilities
31,059 46,045 Common stock 4 3
Additional paid-in capital 203,206 188,078 Accumulated other
comprehensive income 1,073 931 Accumulated deficit (185,796
) (177,319 )
Stockholders' equity 18,487
11,693
Total liabilities and stockholders'
equity $ 49,546 $ 57,738
Glu Mobile Inc.
Consolidated Statements of
Operations (in thousands, except per share data)
(unaudited) Three Months Ended Nine Months
Ended September 30, September 30, September
30, September 30, 2010 2009 2010
2009 Revenues $ 15,468 $ 19,645
$ 48,709 $ 60,292 Cost of revenues:
Royalties 3,934 5,302 12,905 16,782 Impairment of prepaid royalties
and guarantees - 513 663 1,102 Amortization of intangible assets
1,009 1,420 3,243 5,680
Total cost of revenues 4,943
7,235 16,811 23,564 Gross profit
10,525 12,410 31,898 36,728
Operating expenses: Research and development 5,858 6,662
18,748 19,707 Sales and marketing 2,692 3,556 8,100 11,214 General
and administrative 3,107 3,986 9,972 12,376 Amortization of
intangible assets 53 58 160 160 Restructuring charge - 919 1,287
1,432
Total operating expenses 11,710 15,181
38,267 44,889 Loss from operations
(1,185) (2,771) (6,369) (8,161)
Interest and other income/(expense), net: Interest income 7
7 20 86 Interest expense (98) (279) (539) (1,008) Other
income/(expense), net 177 (28) (586) 272 Interest and other
income/(expense), net
86 (300) (1,105)
(650) Loss before income taxes (1,099)
(3,071) (7,474) (8,811) Income tax provision
(504) (917) (1,003) (2,472)
Net loss $ (1,603) $
(3,988) $ (8,477) $ (11,283) Net loss
per share - basic and diluted $ (0.04) $ (0.13)
$ (0.26) $ (0.38) Weighted average common
shares outstanding - basic and diluted 36,042
29,864 32,392 29,694 Stock-based
compensation expense included in: Research and development $
104 $ 166 $ 385 $ 546 Sales and marketing 50 170 163 480 General
and administrative 201 338 681 1,176
Total stock-based
compensation expense $ 355 $ 674 $ 1,229 $ 2,202
Glu Mobile
Inc. Three Months Ended GAAP to
Non-GAAP Reconciliation September 30, 2010 (in
thousands, except per share data) (unaudited)
GAAP Adjustments Non-GAAP
Amortization of intangible assets $ 1,009 $ (1,009 ) $ -
Total cost of revenues 4,943
(1,009 ) 3,934 Gross
profit 10,525 1,009
11,534 Research and development 5,858
(104 ) a 5,754 Sales and marketing 2,692 (50 ) a 2,642 General and
administrative 3,107 (201 ) a 2,906 Amortization of intangible
assets 53 (53 ) -
Total
operating expenses 11,710
(408 ) 11,302
Income/(loss) from operations (1,185
) 1,417 232
Interest and other income/(expense), net 86
(177 ) b (91 )
Income/(loss) before income taxes
(1,099 ) 1,240
141 Net loss $
(1,603 ) $ 1,240 $
(363 ) Reconciliation of net loss and net
loss per share: Non-GAAP net loss per share - basic $ (0.04 ) $
(0.01 ) Non-GAAP net loss per share - diluted $ (0.04 ) $ (0.01 )
Shares used in computing basic net loss per share 36,042 36,042
Shares used in computing diluted net loss per share 36,042 36,042
a - Excluded amount represents stock-based compensation
expense of $355 b - Excluded amount represents foreign currency
exchange gain
Glu Mobile Inc. Three Months Ended GAAP to
Non-GAAP Reconciliation September 30, 2009 (in
thousands, except per share data) (unaudited)
GAAP Adjustments Non-GAAP
Amortization of intangible assets $ 1,420 $ (1,420 ) $ -
Total cost of revenues 7,235
(1,420 ) 5,815 Gross
profit 12,410 1,420
13,830 Research and development 6,662
(166 ) a 6,496 Sales and marketing 3,556 (170 ) a 3,386 General and
administrative 3,986 (338 ) a 3,648 Amortization of intangible
assets 58 (58 ) - Restructuring charge 919
(919 ) -
Total operating expenses
15,181 (1,651 )
13,530 Income/(loss) from
operations (2,771 ) 3,071
300 Interest and other expense,
net (300 ) 28 b (272 )
Income/(loss)
before income taxes (3,071 )
3,099 28
Net loss $ (3,988 ) $
3,099 $ (889 )
Reconciliation of net loss and net loss per share: Non-GAAP
net loss per share - basic $ (0.13 ) $ (0.03 ) Non-GAAP net loss
per share - diluted $ (0.13 ) $ (0.03 ) Shares used in computing
basic net loss per share 29,864 29,864 Shares used in computing
diluted net loss per share 29,864 29,864 a - Excluded amount
represents stock-based compensation expense of $674 b - Excluded
amount represents foreign currency exchange loss
Glu Mobile Inc. Nine
Months Ended GAAP to Non-GAAP Reconciliation
September 30, 2010 (in thousands, except per share
data) (unaudited) GAAP Adjustments
Non-GAAP Amortization of intangible assets $
3,243 $ (3,243 ) $ -
Total cost of revenues
16,811 (3,243 )
13,568 Gross profit 31,898
3,243 35,141
Research and development 18,748 (385 ) a 18,363 Sales and
marketing 8,100 (163 ) a 7,937 General and administrative 9,972
(681 ) a 9,291 Amortization of intangible assets 160 (160 ) -
Restructuring charge 1,287 (1,287 ) -
Total operating expenses 38,267 (2,676
) 35,591 Loss from
operations (6,369 ) 5,919
(450 ) Interest and other
expense, net (1,105 ) 584 b (521 )
Loss before income taxes (7,474 )
6,503 (971 )
Net loss $ (8,477 )
$ 6,503 $ (1,974 )
Reconciliation of net loss and net loss per share: Non-GAAP
net loss per share - basic $ (0.26 ) $ (0.06 ) Non-GAAP net loss
per share - diluted $ (0.26 ) $ (0.06 ) Shares used in computing
basic net loss per share 32,392 32,392 Shares used in computing
diluted net loss per share 32,392 32,392 a - Excluded amount
represents stock-based compensation expense of $1,229. b - Excluded
amount represents foreign currency exchange losses.
Glu Mobile Inc. Nine
Months Ended GAAP to Non-GAAP Reconciliation
September 30, 2009 (in thousands, except per share
data) (unaudited) GAAP Adjustments
Non-GAAP Amortization of intangible assets $
5,680 $ (5,680 ) $ -
Total cost of revenues
23,564 (5,680 )
17,884 Gross profit 36,728
5,680 42,408
Research and development 19,707 (546 ) a 19,161 Sales and
marketing 11,214 (1,355 ) a 9,859 General and administrative 12,376
(1,176 ) a 11,200 Amortization of intangible assets 160 (160 ) -
Restructuring charge 1,432 (1,432 ) -
Total operating expenses 44,889
(4,669 ) 40,220
Income/(loss) from operations
(8,161 ) 10,349
2,188 Interest and other expense, net
(650 ) (270 ) b (920 )
Income/(loss) before income
taxes (8,811 ) 10,079
1,268 Net loss
$ (11,283 ) $ 10,079
$ (1,204 ) Reconciliation of
net loss and net loss per share: Non-GAAP net loss per share -
basic $ (0.38 ) $ (0.04 ) Non-GAAP net loss per share - diluted $
(0.38 ) $ (0.04 ) Shares used in computing basic net loss per share
29,694 29,694 Shares used in computing diluted net loss per share
29,694 29,694 a - Excluded amount represents stock-based
compensation expense of $2,202 and MIG earnout expenses of $875 b -
Excluded amount represents foreign currency exchange gains.
In addition to the reasons stated above, which are generally
applicable to each of the items Glu excludes from its non-GAAP
financial measures, Glu believes it is appropriate to exclude
certain items for the following reasons:
Amortization of Intangible Assets. When analyzing the operating
performance of an acquired entity, Glu's management focuses on the
total return provided by the investment (i.e., operating profit
generated from the acquired entity as compared to the purchase
price paid) without taking into consideration any allocations made
for accounting purposes. Because the purchase price for an
acquisition necessarily reflects the accounting value assigned to
intangible assets (including acquired in-process technology and
goodwill), when analyzing the operating performance of an
acquisition in subsequent periods, Glu's management excludes the
GAAP impact of acquired intangible assets to its financial results.
Glu believes that such an approach is useful in understanding the
long-term return provided by an acquisition and that investors
benefit from a supplemental non-GAAP financial measure that
excludes the accounting expense associated with acquired intangible
assets.
In addition, in accordance with GAAP, Glu generally recognizes
expenses for internally-developed intangible assets as they are
incurred until technological feasibility is reached,
notwithstanding the potential future benefit such assets may
provide. Unlike internally-developed intangible assets, however,
and also in accordance with GAAP, Glu generally capitalizes the
cost of acquired intangible assets and recognizes that cost as an
expense over the useful lives of the assets acquired (other than
goodwill, which is not amortized, and acquired in-process
technology, which is expensed immediately, as required under GAAP).
As a result of their GAAP treatment, there is an inherent lack of
comparability between the financial performance of
internally-developed intangible assets and acquired intangible
assets. Accordingly, Glu believes it is useful to provide, as a
supplement to its GAAP operating results, a non-GAAP financial
measure that excludes the amortization of acquired intangibles.
Stock-Based Compensation Expense. Glu adopted ASC 718,
"Compensation – Stock Compensation" beginning in its fiscal year
ended December 31, 2006. When evaluating the performance of its
consolidated results, Glu does not consider stock-based
compensation charges. Likewise, Glu's management team excludes
stock-based compensation expense from its short and long-term
operating plans. In contrast, Glu's management team is held
accountable for cash-based compensation and such amounts are
included in its operating plans. Further, when considering the
impact of equity award grants, Glu places a greater emphasis on
overall stockholder dilution rather than the accounting charges
associated with such grants.
Glu believes it is useful to provide a non-GAAP financial
measure that excludes stock-based compensation in order to better
understand the long-term performance of its business. In addition,
given Glu's adoption of ASC 718 beginning with its fiscal year
ended December 31, 2006, Glu believes that a non-GAAP financial
measure that excludes stock-based compensation will facilitate the
comparison of its year-over-year results.
Restructuring Charges. Glu undertook restructuring activities in
2009, and recorded (1) a non-cash restructuring charge due to a
change in the sublease probability assumptions for the portion of
the Company’s corporate headquarters that were vacated in 2008 and
the costs to exit a portion of the Company’s EMEA headquarters, (2)
a restructuring charge related to termination benefits to be paid
pursuant to the transition agreement with the former CEO and (3)
cash restructuring charges due to termination of certain employees
in Glu’s US and EMEA offices. In the first and second quarters of
2010, Glu recorded restructuring charges related to termination of
certain employees in the Company’s China, United States and
European offices. Glu recorded the severance costs as an operating
expense when it communicated the benefit arrangement to the
employee and no significant future services, other than a minimum
retention period, were required of the employee to earn the
termination benefits. Glu believes that these restructuring charges
do not reflect the Company's ongoing operations and that investors
benefit from a supplemental non-GAAP financial measure that
excludes these charges.
MIG Earnout Expenses. As part of the acquisition of MIG, Glu
committed to pay additional consideration in the form of cash and
stock to the MIG shareholders and bonus payments in the form of
stock to two officers of MIG, who were also MIG shareholders. Glu
initially recorded the estimated contingent consideration and
bonuses earned by the two officers as stock-based and non-equity
compensation over the two-year vesting period ending December 31,
2009, and has excluded from its non-GAAP financial measures the
impact of the non-equity component of the additional consideration.
In the quarter ended December 31, 2008, Glu restructured these
payments into debt obligations that become due at various times
through December 31, 2010. Glu believes that these earnout expenses
affect comparability from period to period and that investors
benefit from a supplemental non-GAAP financial measure that
excludes these charges.
Foreign currency exchange gains and losses. Foreign currency
exchange gains and losses represent the net gain or loss that Glu
has recorded for the impact of currency exchange rate movements on
cash and other assets and liabilities denominated in foreign
currencies related to the revaluation of assets and liabilities.
Accordingly, foreign currency exchange gains and losses are
generally unpredictable and can cause Glu’s reported results to
vary significantly. Due to the unusual magnitude of these gains and
losses, and the fact that Glu has not engaged in hedging or taken
other actions to reduce the likelihood of incurring a sizeable net
gain or loss in future periods, Glu began, with the quarter ended
December 31, 2008, to present non-GAAP net loss and net loss per
share excluding foreign exchange gains and losses for comparability
purposes. Glu believes that these gains and losses do not reflect
its ongoing operations and that investors benefit from a
supplemental non-GAAP financial measure that excludes these items,
enabling investors to compare the Company's core operating results
in different periods without this variability. Foreign exchange
gains/(losses) recognized during 2009 and the 2010 were as follows
(in thousands):
March 31, 2009 (461) June 30, 2009 759 September 30, 2009
(28) December 30, 2009 (215)
FY 2009 55 March
31, 2010 (332) June 30, 2010 (429) September 30, 2010 177
FY
2010 (584)
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