Glu Mobile’s smartphone revenues more than triple to $10.1M in the fourth quarter

It’s been a rough ride for Glu Mobile over the last few years. But it looks like the company revenues are just holding steady as smartphone revenues compensate for the declines in Glu’s old feature phone business. That suggests it may be able to cross over into profitability next year.

Glu’s smartphone revenues tripled year-over-year to $10.1 million, meaning the company now makes about two-thirds of its revenues from iOS and Android. A year ago, just one-fifth of Glu’s revenues came from smartphones, showing that the company is managing the transition to iOS and Android. Shares rallied on the news, climbing 6.1 percent in after-hours trading to $4.19.

Glu grew daily active users to 2.9 million from 2.1 million in the previous quarter, while monthly active users went from 22.1 million to 31.4 million. (Zynga, for comparison, said it had 13 million daily active users on mobile devices in December.) The number of in-app purchases rose to 1.52 million in the fourth quarter from 866,000 in the previous one. The average purchase size declined to $5.79 from $6.40 as Glu used discounts to boost overall volume.

Android revenue grew to $4.3 million in the fourth quarter, but its share of Glu’s total sales fell to 29 percent. That mirrors the trend we saw with Apple’s remarkable $46.3 billion quarter boosting the entire iOS ecosystem relative to Android.

That said, it looks like near-term growth is slowing and Glu is still at least a year away from being profitable. Glu grew smartphone revenues by just $400,000 over the previous quarter in what was supposed to be one of the most lucrative periods of the year for developers given the iPhone 4S launch and the holidays.

The market is just becoming more competitive as we’re now hearing that it’s now taking around 100,000 downloads to break into the top 25 free apps in the U.S. Previously, developers only needed to break the 100,000 mark if they wanted placement in the top 10. (Apple also warned developers not to game rankings this month.)

“The periods of time in which games retain their peak revenue is shortening,” noted chief executive Niccolo de Masi. The other key point to remember is that Glu’s growth in the first half of the year was also enhanced by offer wall revenues, a strategy which is no longer viable because Apple clamped down on these practices back in April.

Even as churn continues to push titles in and out of the top quickly, a few of Glu’s brands seem to have staying power. The action-adventure game Gun Bros has earned $7.9 million since its launch in 2010. In the fourth quarter, it earned $1.4 million, only slightly down from the $1.5 million it earned the previous quarter. Another stalwart, Contract Killer, brought in $1.9 million. Bug Village brought in $700,000 while Eternity Warriors earned $1 million.

Overall, Glu Mobile doesn’t expect to be profitable until after this year when it breaks even on an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in the fourth quarter of this year. The company widened its annual loss to $21.2 million compared to $11.4 million the year before because it made a big bet through the acquisitions of Griptonite and Blammo Games in the middle of the year. The net loss for the fourth quarter was $10 million.

However, the picture could change as Blammo just published its first game Stardom and Glu expects that Griptonite will start producing titles by March. The Griptonite deal also brought $10 million in cash on the studio’s balance sheet to Glu. Glu will end the year with $32.2 million in cash on its balance sheet, up from $12.9 million the year before.

Glu says smartphones revenues (on non-generally accepted accounting principles or Non-GAAP) will come in at between $14 and 15 million this quarter. For the year, smartphone revenues should make up between 83 and 95 percent of the company’s total Non-GAAP revenues. Glu says it expects Non-GAAP smartphone revenues to come in between $71.0 million and $75.0 million for the full year.

Publish date: February 7, 2012 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT