Glu Mobile Inc. Roth Capital Conference March 10, 2015

Transcription

1 Glu Mobile Inc. Roth Capital Conference March 10, 2015 Eric R. Ludwig COO and CFO Greg Cannon VP of Finance and IR Page 1

2 Safe Harbor Statement This presentation contains "forward-looking" statements including: Glu has an expanding global presence, particularly in APAC; we expect to announce additional celebrity partnerships throughout the first half of 2015; we expect to have a total reach of approximately 400 million social followers by the end of 2016 once we sign up these new expected celebrity partnerships; the expected next title releases for each of our core franchises and Hollywood partnerships; that we are minimally exposed to increases in advertising rates; Glu is benefitting from strong mobile secular trends in the installed base for smartphones and tablets and the popularity of games among all apps; Glu has multiple growth opportunities through wearables, the quad screen future, mobile ad spending and international expansion; that we have a growing and engaged installed base; Glu s expected strong 2015 title roadmap and the expected half of 2015 in which we expect these titles to launch; and our Q and full year 2015 guidance. 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: consumer demand for smartphones, tablets and next-generation platforms does not grow as significantly as we anticipate or that we will be unable to capitalize on any such growth; the risk that we do not realize a sufficient return on our investment with respect to our efforts to develop free-to-play games for smartphones and tablets, the risk that we do not maintain our good relationships with Apple and Google; 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 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, free-to-play gaming, is smaller than anticipated; risks related to the restatement of certain of our historical financial statements and other risks detailed under the caption "Risk Factors" in our Form 10-Q filed with the Securities and Exchange Commission on November 10, 2014 and our other SEC filings. You can locate these reports through our website at These "forward-looking" statements are based on estimates and information available to us on March 10, 2015, except that our Q and FY-2015 guidance speaks as of February 4, 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. Page 2

3 Use of Non-GAAP Financial Measures Glu uses in this presentation 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 non- GAAP revenues, non-gaap smartphone revenues, non-gaap cost of revenues, non-gaap gross profit, non-gaap gross margin, non-gaap operating expenses, non-gaap operating margin, non-gaap net income/(loss), non-gaap net income/(loss) per share, Adjusted EBITDA and Adjusted EBITDA margin. These non- GAAP financial measures exclude the following items from Glu's unaudited consolidated statements of operations: Change in deferred revenues and deferred cost of revenues; Amortization of intangible assets; Non-cash warrant expense; Stock-based compensation expense; Restructuring charges; Change in fair value of Blammo earnout; Transitional costs; Release of tax liabilities and valuation allowance; 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 operating performance and is defined as non- GAAP operating income/(loss) excluding depreciation. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by non-gaap revenue. 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. For a reconciliation of these non-gaap financial measures to their most directly comparable GAAP financial measures, please refer to the tables at the end of this presentation. Page 3

4 Executive Summary Page 4

5 Page 5

6 Seasoned Management Team CEO Niccolo de Masi 20 Quarters EVP, COO & CFO Eric R. Ludwig 40 Quarters Pres. of Pub. Chris Akhavan 7 Quarters Page 6

7 Glu: Global Leader In Mobile Gaming Pure-play mobile gaming company Deeply aligned with mobile ecosystem (ios & Android) Expanding global presence, particularly APAC 14 year history, 8 on NASDAQ 650+ employees in major sites: San Francisco, CA Bellevue, WA, Long Beach, CA Toronto, Canada Moscow, Russia Beijing, China Hyderabad, India Page 7

8 Recent Highlights Q4 non-gaap revenues of $76.2 million Q4 Adjusted EBITDA of $14.1 million; Record Adjusted EBITDA margin of 18.5%. Beat bottom line Adjusted EBITDA midpoint guidance by 214% Record Q4 cash flow from operations of $19.3 million 2014 full non-gaap year revenue represents a four-year compound annual growth rate of 37.9% since 2010 Signed five-year, exclusive mobile game partnership with Katy Perry Page 8

9 Social Power Celebrity Kim Kardashian West Katy Perry Social Reach* 78M 170M ~248M total social followers of Glu celebrity brands* Additional partnerships will be announced throughout the first half of 2015 Long term partnerships with annuity characteristics Anticipated total social reach to be ~400M by the end of 2016 through new partnerships* *Aggregate # of followers across Facebook + Twitter + Instagram + Vevo + Vine + Tumblr followers as of January 30, There is some overlap of these social audiences between channels and celebrities. Page 9

10 37.9% 4-Year Topline CAGR Non-GAAP Revenue $241.8 $66.9 $82.7 $108.9 $ Non-GAAP revenues have been restated or revised, as appropriate, to reflect gross accounting for digital storefronts for 2010, 2011, 2012 and Q113 and prospectively, as outlined in the Company s 8/6/2013 Form 8-K and press release Page 10

11 $ in Millions Batting Average Improving* Non-GAAP Revenue per Title Launch $20.0 $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 $18.1 $8.7 $4.5 $2.6 $ *Computed based on the respective year s total non-gaap smartphone revenue from games internally developed by Glu, except that Racing Rivals is included in revenue for 2014, divided by the # of internally developed games launched by Glu in that year, including Racing Rivals for Certain games that were launched in one year, may contribute significantly to revenues in a subsequent year, such as Deer Hunter 2014, which was launched in 2013, but also contributes to the batting average for Non-GAAP revenues have been restated or revised, as appropriate, to reflect gross accounting for digital storefronts for 2010, 2011, 2012 and Q113 and prospectively, as outlined in the Company s 8/6/2013 Form 8-K and press release Page 11

12 Hit Ratio Improving 12 90% 10 80% 70% 8 60% 6 50% 40% 4 30% 2 20% 10% % # of new launches reaching Top 10 grossing games % of new launches reaching Top 10 grossing games # of new launches reaching Top 25 grossing games % of new launches reaching Top 25 grossing games # of new launches reaching Top 50 grossing games % of new launches reaching Top 50 grossing games # of new launches reaching Top 100 grossing games % of new launches reaching Top 100 grossing games *Based on top grossing ranking for all games on the US App Store for iphone through December 31, 2014; Racing Rivals has been considered a 2014 launch in the above analysis Page 12

13 Hollywood Leadership Glu s 2015 Partnerships *Source: Asymco.com January 22, 2015; App Store billing and box office revenue estimates in millions Page 13

14 Leader in 4 genres with 8 game engines Franchise Releases Next Next CK Core Casual Racing Katy Perry Sports Page 14

15 Staying Power of Top Grossing Games Game* Total months in US top 30 grossing games** Game* Total months in US top 30 grossing games** 1. Clash of Clans 27 months 2. Game of War - Fire Age 17 months 3. Candy Crush Saga 25 months 4. Candy Crush Soda Saga 2 months 5. Big Fish Casino 27 months 6. Madden NFL Mobile 3 months 7. Kim Kardashian: Hollywood 7 months 8. Minecraft Pocket Edition 26 months 9. Farm Heroes Saga 12 months 10. Hay Day 27 months 11. MARVEL Contest of Champions 1 month 12. DoubleDown Casino 22 months 13. Modern War 25 months 14. Slotomania 27 months 15. Family Guy: The Quest for Stuff 8 months 16. SimCity BuildIt 0 months 17. Boom Beach 9 months 18. Pet Rescue Saga 18 months 19. The Simpsons: Tapped Out 27 months 20. Trivia Crack 0 months 21. Bubble Witch 2 Saga 6 months 22. Cookie Jam 6 months 23. Racing Rivals 8 months 24. The Sims: FreePlay 20 months 25. myvegas Slots 12 months 26. Jackpot Party Casino - Slots 16 months 27. GSN Casino 16 months 28. Deer Hunter months 29. Trivia Crack (Ad Free) 0 months 30. Castle Clash by IGG 0 months *Based on top grossing ranking for all games on the US App Store for iphone taken on December 21 st 2014, AppAnnie.com **Based on total number of full calendar months between October 2012 December 2014 the respective game ranked as a top 30 grossing iphone game on aggregate in the United States, App Annie Intelligence Page 15

16 Diversified Portfolio $241.8M Total Non-GAAP Revenues in 2014 Other catalog $36.9M 15% Contract Killer 2 $4.4M Frontline Commando 2 $5.8M Contract Killer: Sniper $6.2M 2% 2% 2% 31% Kim Kardashian: Hollywood $74.3M Robocop $6.5M 3% Frontline Commando: D-Day $6.6M 3% Dino Hunter: Deadly Shores $10.0M 4% Racing Rivals $18.3M 8% Eternity Warriors 3 $20.9M 9% 21% Deer Hunter 2014 $52.0M Page 16

17 Ad Revenues Hedge Against Increases to CPI $14,000 25% $12,000 20% 19.8% 19.5% $10,000 $8,000 $6,000 15% 10% 13.1% 15.1% 10.9% 10.5% 14.6% 12.1% 19.6% 15.5% 15.6% 15.3% 14.7% 14.9% 15.5% 12.6% $4,000 5% $2,000 $- Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Ad Revenues (in thousands) Variable Marketing Expense (in thousands) 0% Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Ad Revenues as % of Total Revenues Variable Marketing Expense as % of Total Revenues Minimally exposed to increases in CPI Global distribution with localization in up to 12 languages Page 17

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21 Example Franchise Over Time $81.8M Cumulative lifetime non- GAAP revenue through December 31, 2014 $13.5M $3.9M $3.2M Launch Year Page 21

22 Glu & Big Data Analytics Glu Analytics Capabilities: Capable of processing 70 million events per second Ingesting 2 billion events per day Aggregating 75 million KPI metrics per day 2 trillion event capacity, easily scalable Usage of Analytics: Optimization of user acquisition, retention, paying user conversion & LTV Continually refining game performance through testing and analysis Page 22

23 Tablets ipad Smartphones iphone Strong Mobile Secular Trends Smartphone & Tablet Installed Base (m) (1) Games are the #1 Category (Mobile Devices) (2&3) 3,500 3,000 3,023 % of Time Spent Worldwide Top Grossing Apps United States 2,500 2,000 1,500 1,000 1, % 39% 11% 89% % 10% Smartphone Tablet 67% 90% (1) Strategy Analytics (2) Flurry Analytics (3) App Annie Intelligence Top 100 grossing apps, December Page 23 Games Other

24 Opportunity / Revenue / Value Multiple Long-Term Growth Opportunities $ $ $ Time Page 24

25 Financial Overview Page 25

26 Financial Investment Highlights Strong Top Line Growth Diversified Portfolio of Franchises Cost-Effective Customer Acquisition Long Tail Games Provide Significant Visibility Growing & Engaged Installed Base Page 26

27 Q414 Financial Summary Presented in millions of USD, with the exception of per share data and diluted share count. Q414 Non-GAAP Guidance Actuals Low High Revenue Gross Profit Gross Margin 61.1% 58.2% 58.2% Operating Expenses Depreciation Adjusted EBITDA Adjusted EBITDA Margin 18.5% 5.8% 8.5% Basic: Earnings per Share $ 0.12 $ 0.01 $ 0.03 Basic Shares (in 000s) 103, , ,700 Diluted: Earnings per Share $ 0.11 $ 0.01 $ 0.03 Diluted Shares (in 000s) 106, , ,100 Page 27

28 Q414 Non-GAAP Results ($ in millions) Q414 Q314 Q/Q Q413 Y/Y Total Revenue $ 76.2 $ 83.6 (9%) $ % Gross Profit (7%) % Gross Margin 61.1% 59.6% 150 bp 73.0% (1,190) bp Operating Expense % 25.7 (29%) Operating Income/(Loss) (9%) % Adjusted EBITDA $ 14.1 $ % $ 6.2 (127%) Page 28

29 Non-GAAP Revenue and Adjusted EBITDA (In millions) Non-GAAP Revenue (In millions) Adjusted EBITDA $ $ $15.4 $ $42.8 $ $6.2 $6.5 $35.0 $24.7 $23.2 $ (5.0) ($1.4) ($2.9) ($0.9) ($4.1) (10.0) Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Non-GAAP revenues have been restated to reflect gross accounting for digital storefronts Q113 and prospectively, as outlined in the Company s 8/6/2013 Form 8-K and press release. Page 29

30 % of Non-GAAP Revenue 140% 120% 100% 80% 60% 40% 20% 0% 5% 4% 3% 5% 3% 4% 4% 24% 24% 4% 23% 3% 3% 1% 2% 23% 2% 2% 23% 25% 13% 11% 44% 48% 49% 39% 26% 25% 27% 28% 17% 20% 20% 22% 24% 22% 25% 20% 18% 16% 14% 15% 14% 8% 9% 12% 6% 8% Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Hosting and other costs Royalties Platform commissions R&D Opex S&M Opex G&A Opex Non-GAAP revenues have been restated to reflect gross accounting for digital storefronts Q113 and prospectively, as outlined in the Company s 8/6/2013 Form 8-K and press release. Page 30

31 Non-GAAP Revenue by Geography (In millions) $ $ $ $ Q114 Q214 Q314 Q414 NA APAC ROW Q % % % Q212 Q312 Q412 Q113 Q213 Q313 Q413 NA APAC ROW Page 31

32 Non-GAAP Revenue Mix (In millions) Non-GAAP Revenue by Platform $47.0 $42.8 3% 4% 40 $ % 35% 6% 30 $24.7 $23.2 $ % 14% 20 12% 11% 27% 29% 29% 61% 59% 10 56% 59% 59% 60% $83.6 2% 31% 67% $76.2 2% 36% 62% (In millions) Non-GAAP Revenue by Category % 40 4% 15% 20% 4% 30 20% 16% 20 12% 11% 11% 10% 12% 83% 76% 76% 10 73% 78% 77% 15% 85% 15% 85% Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 ios Android All Other In-App Purchases Ads Premium/All Other Non-GAAP revenues have been restated to reflect gross accounting for digital storefronts for Q113 and prospectively, as outlined in the Company s 8/6/2013 Form 8-K and press release. The presentation of platform and category mix contribution in prior presentations was reported as a percentage of non-gaap smartphone revenues. All prior percentages in the above graphs have been updated to reflect each category s respective percentage of total non-gaap revenues. The Premium/All Other revenues include featurephone revenues. Page 32

33 Non-GAAP Revenue by Title $76.2M Total Non-GAAP Revenues in Q414 Q314 23% Racing Rivals $12.5M Dino Hunter: Deadly Shores $2.7M Tap Sports: Baseball $2.1M Kim Kardashian: Hollywood PlayFirst Legacy* $29.3M $1.0M Q214 40% Q413, 3% Q114, 2% Eternity Warriors 3 Frontline Commando 2 Robocop $2.4M $0.7M $0.5M Q414 11% Contract Killer: Sniper Diner Dash $6.1M $2.3M Contract Killer 2 Stardom Hollywood $0.8M $0.5M Other 7% Q313 14% *Comprised of legacy games already live prior to acquisition of PlayFirst by Glu on May 14, 2014 Deer Hunter 2014 $10.6M Page 33

34 Organic Non-GAAP Revenue Growth Acquisition Acquisition Date Q414 Non-GAAP Revenues* % of Total Non-GAAP Revenues Pick6 Studios Oct-13 $ 2.1 PlayFirst, Inc. May Cie Games, Inc. Aug Subtotal: Inorganic Non-GAAP Revenues $ % Glu Organic Non-GAAP Revenues % Q414 Total Non-GAAP Revenues $ % Q413 Total Non-GAAP Revenue $ 42.8 Y/Y Organic Revenue Growth 36% * Presented in millions of USD, except percentages Page 34

35 Organic Non-GAAP Revenue Growth 113% non-gaap revenue growth Y/Y including acquisitions Pick6 Studios PlayFirst, Inc. Cie Games, Inc. $241.8 $18.7 $3.8 $4.5 89% organic non-gaap revenue growth Y/Y Organic $113.4 $ % Y/Y Organic Revenue Growth $ * Presented in millions of USD, except percentages Page 35

36 Strong Balance Sheet ($ in millions) Q414 Q314 Q413 Cash and cash equivalents Accounts receivable, net Prepaid expenses, royalties and other current assets Other assets Intangible assets & goodwill Total Assets $250.8 $238.3 $ 87.0 Accounts payable and accrued liabilities Accrued expenses, royalties and other liabilities Deferred revenue Common stock/paid in capital Accumulated deficit & other comprehensive income (244.1) (245.2) (251.9) Total Liabilities and Stockholders Equity $250.8 $238.3 $ 87.0 Page 36

37 Strong Consumer Interest (in Millions) Installs (in Millions) 1, ,000.0 Cumulative Installs Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Page 37

38 MAU and DAU Trends (in Millions) DAU (in Millions) MAU Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Aggregate DAU and MAU for each period presented represents the aggregate metric for the last month of the period. An individual who plays two different games in the same month is counted as two active users for that month when we aggregate DAU and MAU across games. In addition, an individual who plays the same game on two different devices during the same month (e.g., an iphone and an ipad) is also counted as two active users for each such month when we average or aggregate DAU and MAU over time. Our methodology for calculating DAU and MAU may differ from the methodology used by other companies to calculate similar metrics. Page 38

39 Guidance Page 39

40 2015 Roadmap 2015 Katy Perry + 3 additional to be announced titles * Title launches within each respective half year are listed in no particular order Page 40

41 2015 Full Year Guidance Guidance ($ in millions) Q115 Q215 Q315 Q Total Revenue (Low) $50.0 $245.0 Total Revenue (High) $52.0 $275.0 Adjusted EBITDA (Low) ($2.0) $30.0 Adjusted EBITDA (High) $0.0 $35.0 Page 41

42 Q115 Guidance ($ in millions, except EPS) Q414 Act Q115 Guidance Low Q115 Guidance High Total Revenue $76.2 $50.0 $52.0 Gross Margin 61.1% 60.4% 60.4% Operating Expense Operating Income/(Loss) 13.5 (2.9) (0.9) Depreciation Addback Adjusted EBITDA $14.1 ($2.0) $0.0 Net Income/(Loss) 12.2 (3.0) (1.0) Basic Shares (millions) Diluted Shares (millions) Net Income/(Loss) Per Basic Share $0.12 ($0.03) ($0.01) Net Income/(Loss) Per Diluted Share $0.11 ($0.03) ($0.01) Page 42

43 2015 Full Year Guidance ($ in millions, except EPS) 2014 Act 2015 Guidance Low High Total Revenue $241.8 $245.0 $275.0 Gross Margin 63.3% 61.3% 61.3% Operating Expense Operating Income Depreciation Addback Adjusted EBITDA $35.1 $30.0 $35.0 Net Income Basic Shares (millions) Diluted Shares (millions) Net Income Per Basic Share $0.36 $0.25 $0.30 Net Income Per Diluted Share $0.34 $0.23 $0.28 Cash and ST Investments Balance $70.9 $85.0 Page 43

44 Key Statistics Market Statistics (as of Jan 30, 2015) (in millions except per share and volume data) Stock Price $ Week High $ Week Low $3.27 Shares Outstanding Avg. Daily Volume (last 90 days) 2,510,936 Market Capitalization $376.2 Debt $0 Cash $70.9 Enterprise Value $305.3 Shares Outstanding is as of 1/30/2015 Cash balance is as of 12/31/2014 Average Daily Volume is calculated using the last 90 calendar days Page 44

45 Investment Highlights Benefitting from Strong Secular Global Mobile Growth Leader in Mobile Gaming Diversified Portfolio of Franchises Strong 2015 Title Roadmap Financials Benefitting from Significant Investments Page 45

46 Non-GAAP Reconciliations Page 46

47 Q414 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Non-GAAP Reconciliation (in thousands, except per share data) (unaudited) GAAP Results Change in deferred revenues Change in deferred platform commissions and royalty expense Amortization of intangible assets Three Months Ended December 31, 2014 Stock-based compensation Transitional Costs Retsructuring Charge Non-cash warrant expense Release of tax liabilities and valuation allowance Foreign currency exchange loss Revenues $ 72,865 $ 3,363 $ - $ - $ - $ - $ - $ - $ - $ - $ 76,228 Cost of revenues: Platform commissions, royalties and other 29, (66) ,667 Amortization of intangible assets 2, (2,434) Total cost of revenues 32, (2,434) (66) ,667 Gross profit 40,806 3,363 (108) 2, ,561 Operating expenses: Research and development 16, (736) ,317 Sales and marketing 12, (209) ,066 General and administrative 7, (1,189) (255) ,710 Amortization of intangible assets (127) Restructuring charge (67) Total operating expenses 35, (127) (2,134) (255) (67) ,093 Income from operations 5,130 3,363 (108) 2,561 2, ,468 Interest and other income/(expense), net: (978) Income before income taxes 4,152 3,363 (108) 2,561 2, ,471 Income tax provision (2,773) ,531 - (1,242) Net income $ 1,379 $ 3,363 $ (108) $ 2,561 $ 2,134 $ 255 $ 67 $ 66 $ 1,531 $ 981 $ 12,229 Non-GAAP Results Earnings per share: Basic $ 0.01 $ 0.12 Diluted $ 0.01 $ 0.11 Number of shares used in computation Basic 103, ,406 Diluted 106, ,954 Page 47

48 Q413 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Non-GAAP Reconciliation (in thousands, except per share data) (unaudited) GAAP Results Change in deferred revenues Change in deferred platform commissions and royalty expense Amortization of intangible assets Three Months Ended December 31, 2013 Stock-based compensation Change in fair value of Blammo earnout Restructuring charge Revenues $ 34,841 $ 8,005 $ - $ - $ - $ - $ - $ - $ - $ 42,846 Cost of revenues: Platform commissions, royalties and other 9,803-1, ,556 Amortization of intangible assets 1, (1,004) Total cost of revenues 10,807-1,753 (1,004) ,556 Gross profit 24,034 8,005 (1,753) 1, ,290 Operating expenses: Research and development 12, (849) ,769 Sales and marketing 10, (103) ,505 General and administrative 4, (632) (56) ,474 Amortization of intangible assets (117) Total operating expenses 27, (117) (1,584) (56) ,748 Income/(loss) from operations (3,471) 8,005 (1,753) 1,121 1, ,542 Interest and other income/(expense), net: (130) Income/(loss) before income taxes (3,601) 8,005 (1,753) 1,121 1, ,542 Income tax benefit Net income/(loss) $ (3,523) $ 8,005 $ (1,753) $ 1,121 $ 1,584 $ 56 $ - $ - $ 130 $ 5,620 Non-cash warrant expense Foreign currency exchange gain Non-GAAP Results Earnings per share: Basic $ (0.05) $ 0.07 Diluted $ (0.05) $ 0.07 Number of shares used in computation Basic 78,071 78,071 Diluted 78,071 81,433 Page 48

49 YTD 2014 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Non-GAAP Reconciliation (in thousands, except per share data) (unaudited) GAAP Results Change in deferred revenues Change in deferred platform commissions and royalty expense Amortization of intangible assets Stock-based compensation Twelve Months Ended December 31, 2014 Transitional Costs Retsructuring Charge Non-cash warrant expense Change in fair value of Blammo earnout Release of tax liabilities and valuation allowance Foreign currency exchange loss Revenues $ 223,146 $ 18,628 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 241,774 Cost of revenues: Platform commissions, royalties and other 80,992-8, (1,192) ,712 Amortization of intangible assets 4, (4,767) Total cost of revenues 85,759-8,912 (4,767) (1,192) ,712 Gross profit 137,387 18,628 (8,912) 4, , ,062 Operating expenses: Research and development 64, (7,422) (20) ,842 Sales and marketing 45, (701) ,375 General and administrative 25, (3,510) (1,410) - - (835) ,264 Amortization of intangible assets (508) Restructuring charge (435) - - # Total operating expenses 135, (508) (11,633) (1,430) (435) - (835) ,481 Income from operations 2,065 18,628 (8,912) 5,275 11,633 1, , ,581 Interest and other income/(expense), net: (1,472) , Income before income taxes ,628 (8,912) 5,275 11,633 1, , ,495 32,604 Income tax (provision)/benefit 7, (6,821) Net income $ 8,148 $ 18,628 $ (8,912) $ 5,275 $ 11,633 $ 1,430 $ 435 $ 1,192 $ 835 $ (6,821) $ 1,495 $ 33,338 Non-GAAP Results Earnings per share: Basic $ 0.09 $ 0.36 Diluted $ 0.08 $ 0.34 Number of shares used in computation Basic 91,826 91,826 Diluted 96,922 96,922 Page 49

50 YTD 2013 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Non-GAAP Reconciliation (in thousands, except per share data) (unaudited) GAAP Results Change in deferred revenues Change in deferred platform commissions and royalty expense Amortization of intangible assets Twelve Months Ended December 31, 2013 Stock-based compensation Change in fair value of Blammo earnout Restructuring charge Revenues $ 105,613 $ 7,751 $ - $ - $ - $ - $ - $ - $ - $ - $ 113,364 Cost of revenues: Platform commissions, royalties and other 32,371-1, (427) ,661 Amortization of intangible assets 4, (4,238) Total cost of revenues 37,044-1,717 (4,238) (427) ,096 Gross profit 68,569 7,751 (1,717) 4, ,268 Operating expenses: Research and development 46, (1,948) ,929 Sales and marketing 26, (303) ,817 General and administrative 15, (2,034) (7) ,509 Amortization of intangible assets 1, (1,336) Restructuring charge 1, (1,448) Total operating expenses 91, (1,336) (4,285) (7) (1,448) ,255 Loss from operations (22,762) 7,751 (1,717) 5,574 4, , (4,987) Interest and other income/(expense), net: Loss before income taxes (22,752) 7,751 (1,717) 5,574 4, , (4,954) Income tax (provision)/benefit 2, (3,148) - (305) Net loss $ (19,909) $ 7,751 $ (1,717) $ 5,574 $ 4,285 $ 7 $ 1,448 $ 427 $ (3,148) $ 23 $ (5,259) Non-cash warrant expense Release of tax liabilities Foreign currency exchange gain Non-GAAP Results Net loss per share - basic and diluted $ (0.28) $ (0.07) Number of shares used in computation - basic and diluted 71,453 71,453 Page 50

51 GAAP to Non-GAAP Reconciliation Glu Mobile Inc. Non-GAAP Adjusted EBITDA (in thousands) (unaudited) For the Three Months Ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, GAAP net income/(loss) $ (5,497) $ (2,921) $ (7,968) $ (3,523) $ 133 $ (3,768) $ 10,404 $ 1,379 Change in deferred revenues 111 (1,251) 886 8,005 2,377 (5,874) 18,762 3,363 Change in deferred platform commissions and royalty expense (138) 419 (245) (1,753) (1,209) 1,527 (9,122) (108) Non-cash warrant expense , Amortization of intangible assets 1,569 1,573 1,311 1, ,465 2,561 Depreciation Stock-based compensation 1, ,584 2,979 4,566 1,954 2,134 Change in fair value of Blammo earnout 29 (47) (31) Transitional costs Restructuring charge Foreign currency exchange loss/(gain) (129) (137) Interest and other income (3) (26) (4) - (6) (7) (7) (3) Income tax provision/(benefit) 135 (2,870) (30) (78) (10,850) 2,773 Total Non-GAAP Adjusted EBITDA $ (1,436) $ (2,926) $ (4,142) $ 6,224 $ 6,459 $ (900) $ 15,398 $ 14,137 Page 51

52 Key Operating Metrics Actual Actual Actual Actual Actual Actual Actual Actual (All Revenue Figures are Non-GAAP) Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Total Revenues (in thousands) $ 24,716 $ 23,194 $ 22,608 $ 42,846 $ 46,957 $ 35,036 $ 83,553 $ 76,228 Total Revenues Growth Q/Q (6%) (6%) (3%) 90% 10% (25%) 138% (9%) Total Revenues Growth Y/Y (8%) (22%) (13%) 62% 90% 51% 270% 78% Original IP % of Total Revenues 86% 93% 92% 98% 91% 93% 37% 41% Platform Commissions (in thousands) 5,693 5,554 5,428 9,909 11,886 8,155 21,382 19,391 Royalties (in thousands) 1, , ,121 1,348 10,711 8,441 Hosting and other COGS (in thousands) ,079 1,148 1,406 1,403 1,637 1,835 Total Cost of Revenues (in thousands) 7,600 7,252 7,691 11,555 14,413 10,906 33,730 29,667 Non-GAAP Operating Expenses (in thousands) $19,283 $19,530 $19,694 $25,748 $26,707 $25,638 $35,043 $33,093 Variable Marketing Expense (in thousands) $3,239 $3,508 $3,311 $8,410 $7,271 $5,456 $12,800 $9,641 Variable Marketing as % of Total Revenues 13% 15% 15% 20% 15% 16% 15% 13% Adjusted EBITDA (in thousands) ($1,436) ($2,926) ($4,142) $6,224 $6,459 ($900) $15,398 $14,137 Headcount** (at quarter-end) Daily Active Users (DAU)* (in millions) Monthly Active Users (MAU)* (in millions) Installs (in millions) Cumulative Installs (in millions) In-App Purchase Billable Transactions (in thousands)*** 1,605 1,535 1,618 3,095 3,286 2,257 7,778 7,477 Average Revenues per Billable Transaction*** $10.98 $11.74 $10.70 $10.48 $11.79 $11.84 $9.14 $8.62 *DAU & MAU reflects the DAU & MAU figures for the last month of the quarter **FTE only, excludes contractors, temporary employees and consultants ***Q314 in-app purchase billable transactions and average revenues per billable transaction has been restated to include the impact of Cie Games activity after its acquisition on August 20, 2014 Page 52