Glu Mobile Inc. Q Earnings Call

Transcription

1 Glu Mobile Inc. Q Earnings Call August 2, 2016 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 1

2 Safe Harbor Statement This presentation contains "forward-looking" statements including: that we intend to focus on winner takes all blue ocean genres, and our four game labels are ones where we believe we can be the best in the world in 2016/2017; that we are minimally exposed to increases in CPI; that strong social features in a game will lead to long tail revenues; Glu intends to prioritize making its genre-leading games into evergreen games; Glu intends to focus on retaining and monetizing elder players; Glu has multiple growth opportunities through virtual or augmented reality, the quad screen future, mobile ad spending and international expansion; the planned evolution of Glu s business, including our intention to have our games function as platforms, our goal for catalog Bookings to cover fixed operating expenses and for new launches to account for less than 25% of Bookings in a given year; the expected launch dates of games featuring celebrities we have signed to long-term partnerships; that we believe we have a strong pipeline of games featuring celebrities that will be released in 2016 through 2018; our expected title release slate for 2016; the expected contribution margin flow through of our Bookings; and our Q and full year 2016 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 Glu does not realize the anticipated strategic benefits from its celebrity partnerships and strategic investments; the risk that our development expenses are greater than we anticipate or that we experience product delays; 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 detailedunder the caption "Risk Factors" in our Form 10-Q filed with the Securities and Exchange Commission on May 6, 2016 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 August 2, 2016 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 Q Earnings Glu Mobile Inc. Proprietary 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 Bookings, Adjusted smartphone revenue, Adjusted cost of revenue, Adjusted gross profit, Adjusted gross margin, Adjusted operating expenses, Adjusted operating margin, Adjusted net income/(loss), Adjusted 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 revenue and deferred cost of revenue; Amortization of intangible assets; Non-cash warrant expense; Stock-based compensation expense; Restructuring charges; Transitional costs; Litigation proceeds and costs; Change in fair value of strategic investments; Release of tax liabilities and valuation allowance; and Foreign currency exchange gains and losses primarily related to the revaluation of assets and liabilities. Bookings do not reflect the deferral of certain game revenue that Glu recognizes over the estimated useful lives of paying users of Glu s games and excludes changes in deferred revenue and litigation settlement proceeds. In addition, Glu has included in this presentation Adjusted EBITDA figures which are used to evaluate Glu s operating performance and is defined as Adjusted operating income/(loss) excluding depreciation. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by Bookings. 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. Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 3

4 Executive Summary Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 4

5 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 5

6 Strong Management Team Niccolo de Masi Chairman & CEO Eric R. Ludwig COO & CFO Nick Earl President of Studios Tim Wilson Chief Technology Officer Chris Akhavan Chief Revenue Officer Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 6

7 Diversified Studio Infrastructure Game studios: San Francisco, CA San Mateo, CA Long Beach, CA Bellevue, WA Portland, OR Toronto, Canada Moscow, Russia Support offices: Beijing, China Hyderabad, India London, UK Tokyo, Japan Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 7

8 Glu s 4 Game Labels Focus on winnertakes-all blueocean genres These represent categories where we believe we can be the best in the world in 2016/2017 Label Action Celebrity Sports & Racing Simulation Franchises Nicki Minaj, Taylor Swift Future simulation games Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 8

9 1H 2016: Bookings Delivery from a Broad Portfolio Deer Hunter 2016 $8.1M Contract Killer: Sniper $3.1M Tap Sports Baseball 2016 $11.4M Deer Hunter 2014 $3.0M Other Catalog $17.0M Kendall and Kylie $12.2M Racing Rivals $12.8M Kim Kardashian: Hollywood $19.5M Cooking Dash 2016 $17.8M Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 9

10 Bookings Diversity: Ad Bookings Hedge Against CPI Increases We believe Glu has one of the leading % bookings contributions from ads in the industry Minimally exposed to increases in CPI (in Millions) $ % $12.0 $10.0 $8.0 $6.0 20% 15% 10% 15.5% 14.7% 19.5% 15.6% 15.3% 14.9% 15.5% 12.6% 15.5% 14.8% 17.8% 16.8% 17.6% 16.6% 20.7% 13.8% 18.5% 15.7% 18.0% 17.0% $4.0 $2.0 5% $0.0 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 0% Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Ad & Other Bookings Marketing Expense Ad & Other Bookings as % of Total Bookings Marketing as % of Total Bookings Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 10

11 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 11

12 Growth Landscape Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 12

13 Strong Social & Elder Game = Long Tail Revenues Typical mobile game Peak at launch, then declining curve Launch Date VS. Flat to increasing curve, peak bookings 16 months post launch 18+ Months From Launch Launch Date 18+ Months From Launch Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 13

14 Our Genre Leaders 85 titles shipped over past 6.5 years Prioritize Making into Evergreen Games Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 14

15 Evergreen Games 1. Grow year on year 2. System/mode updates 3. Community does much of the work Focus on retaining & monetizing elder players Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 15

16 Tap Sports Baseball Franchise *Downloads and Bookings represent actual results for the first ninety days since global launch Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 16

17 Monetization Improvements Average Bookings per DAU ( ABPDAU ) is computed as our total Bookings for the applicable title during the first 33 days from launch, divided by 33, divided by the DAU for the title during the period. Average Bookings per Download ( ABPD ) is computed as our total Bookings for the applicable title during the first 33 days from launch, divided by 33, divided by, the number of downloads for the title during the period. Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 17

18 Multiple Long-Term Growth Opportunities $ $ $ Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 18

19 Glu Evolution 1. New launches ~50% of Bookings 2. Forward investing for topline growth 3. Fixed OPEX > catalog Bookings 1. Games-as-Platforms 2. Catalog bookings covers fixed OPEX 3. New launches <25% of Bookings 1. Ramping smartphone business 2. Running off feature-phone operations Bookings ($m) Catalog Bookings Fixed OPEX $67 $83 $109 $113 $242 $ The goal of Bookings growth in 2020 represents a potential outcome if our business strategies are successful. This potential outcome should not be treated as a forecast, projection or financial guidance. We cannot assure you that we will achieve any particular growth rate and we may not grow at all. Our performance is subject to many material risks and uncertainties that could cause our actual performance to fall short of this example scenario, including the risks discussed in our Quarterly Report on Form 10-K filed with the SEC on May 6, 2016 and our other SEC filings. Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 19

20 User Engagement Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 20

21 Consumer Interest (in Millions) Installs (in Millions) 1, , , , Cumulative Installs 1, , , , , , Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 21

22 DAU and MAU Trends (in Millions) DAU (in Millions) MAU Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 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. Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 22

23 ABPDAU and ABPMAU Trends $0.16 $0.14 $0.12 $0.10 $0.08 $0.07 $0.07 $0.13 ABPDAU $0.11 $0.12 $0.10 $0.13 $0.12 $0.12 $0.14 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.24 $0.23 $0.46 ABPMAU $0.41 $0.38 $0.32 $0.41 $0.39 $0.42 $0.47 $0.06 $0.20 $0.04 $0.15 $0.10 $0.02 $0.05 $0.00 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 $0.00 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Average Bookings per DAU ( ABPDAU ) is computed as our total Bookings in a given period, divided by the number of days in that period, divided by, the DAU during the period. Average Bookings per MAU ( ABPMAU ) is computed as our total Bookings in a given period, divided by the number of months in that period, divided by, the MAU during the period. Aggregate DAU and MAU for each period presented represents the aggregate metric for the last month of the period. Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 23

24 CELEBRITY Social Power REACH* LAUNCH OR EXPECTED LAUNCH Kim Kardashian West 154m June 24, 2014 Jason Statham 62m October 22, 2015 Katy Perry 235m December 17, 2015 Kylie & Kendall Jenner 196m February 19, 2016 Britney Spears 102m May 19, 2016 Gordon Ramsay 13m June 28, 2016 Nicki Minaj 136m Fall 2016 Taylor Swift 261m Beta by end of Billion* total social followers inked Long-term partnerships Strong pipeline of games to be released in 2016 through 2018 Signed but not announced 330m *Aggregate # of followers across Facebook + Twitter + Instagram + Vevo followers as of August 1, There is overlap of these social audiences between channels and celebrities. Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 24

25 Financial Overview Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 25

26 Q216 Financial Summary Q216 Guidance (in millions, except EPS) Actuals Low High Bookings $ 50.9 $ 46.0 $ 49.0 Adjusted Gross Profit Adjusted Gross Margin 62.7% 61.2% 61.2% Adjusted Operating Expenses Depreciation Adjusted EBITDA $ (3.2) $ (7.0) $ (5.5) Basic & Diluted: Earnings/(Loss) per Share $ (0.03) $ (0.06) $ (0.05) Basic & Diluted Shares Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 26

27 Q216 Non-GAAP Results ($ in millions) Q216 Q116 Q/Q Q215 Y/Y Bookings $ 50.9 $ 54.0 (6%) $ 57.5 (11%) Adjusted Gross Profit (3%) 36.0 (11%) Adjusted Gross Margin 62.7% 61.1% 160 bp 62.6% 10 bp Adjusted Operating Expense (4%) % Adjusted Operating Income/(Loss) (3.9) (4.4) (11%) 1.0 (490%) Adjusted EBITDA $ (3.2) $ (3.8) (16%) $ 1.7 (288%) Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 27

28 Bookings and Adjusted EBITDA (in Millions) Bookings (in Millions) Adjusted EBITDA $90.0 $83.6 $20.0 $80.0 $70.0 $60.0 $50.0 $40.0 $47.0 $35.0 $76.2 $62.4 $57.5 $64.4 $57.9 $54.0 $50.9 $15.0 $10.0 $5.0 $6.5 $15.4 $14.1 $3.9 $1.7 $8.5 $2.8 $30.0 $0.0 $20.0 $10.0 ($5.0) ($0.9) ($3.8) ($3.2) $0.0 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 ($10.0) Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 28

29 % of Bookings 120% 100% 80% 3% 2% 25% 4% 4% 23% 2% 2% 13% 11% 2% 10% 26% 3% 10% 25% 3% 13% 4% 10% 24% 3% 3% 10% 10% 25% 25% Hosting and other costs Royalties 60% 40% 28% 39% 26% 25% 17% 20% 28% 30% 25% 24% 33% 35% 39% Platform commissions R&D Opex 20% 0% 20% 22% 23% 20% 22% 21% 18% 16% 18% 19% 9% 12% 6% 8% 10% 9% 4% 8% 11% 10% Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 S&M Opex G&A Opex Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 29

30 Bookings by Geography (in Millions) $90.0 $83.6 Q $80.0 $70.0 $60.0 $50.0 $40.0 $ $ $ $ $ $ $ $54.0 $ % 10% $30.0 $ % $ $0.0 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 NA APAC ROW NA APAC ROW Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 30

31 Bookings Mix Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 31

32 Bookings by Vintage $50.9M Total Bookings in Q216 Tap Sports Baseball 2016 $11.3M Kendall and Kylie $3.7M Britney Spears: American Dream$1.1M Deer Hunter 2016 $3.2M Deer Hunter 2014 $1.2M Cooking Dash 2016 $8.9M Kim Kardashian: Hollywood $7.8M Contract Killer: Sniper $1.4M Racing Rivals $5.8M Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 32

33 Strong Balance Sheet ($ in millions) Q216 Q116 Q215 Cash and cash equivalents $ $ $ Accounts receivable, net Prepaid expenses, royalties and other current assets Other assets Intangible assets & goodwill Total Assets $ $ $ Accounts payable and accrued liabilities Accrued expenses, royalties and other liabilities Deferred revenue Common stock/paid in capital Accumulated deficit & other comprehensive income (278.4) (260.1) (248.4) Total Liabilities and Stockholders' Equity $ $ $ Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 33

34 Guidance Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 34

35 6 Launches in 2016 January 2016 December 2016 Taylor Swift* *Beta only Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 35

36 Strong Contribution Margin Flow Through* Branded IP Royalty % of Bookings Original IP Low High Bookings 100.0% 100.0% 100.0% Platform Fees 24.6% 24.6% 24.6% Royalties 0.0% 8.9% 26.5% Gross Margin 75.4% 66.5% 48.9% User Acquisition 16.4% 16.4% 16.4% Contribution Margin of Incremental $1.00 of Bookings 59.0% 50.1% 32.5% *All figures presented on an Adjusted basis. Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 36

37 2016 Full Year Non-GAAP Guidance Guidance ($ in millions) Q116 Q216 Q316 Q Total Bookings (Low) $54.0 $50.9 $50.0 $40.1 $195.0 Total Bookings (High) $54.0 $50.9 $52.0 $45.1 $202.0 Adjusted EBITDA (Low) ($3.8) ($3.2) ($4.0) ($8.0) ($19.0) Adjusted EBITDA (High) ($3.8) ($3.2) ($3.5) ($6.0) ($16.5) Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 37

38 Q316 Non-GAAP Guidance ($ in millions, except EPS) Q216 Act Q316 Guidance Low Q316 Guidance High Bookings $50.9 $50.0 $52.0 Adjusted Gross Margin 62.7% 62.1% 62.1% Adjusted Operating Expense Adjusted Operating Income/(Loss) (3.9) (4.6) (4.1) Depreciation Addback Adjusted EBITDA ($3.2) ($4.0) ($3.5) Adjusted Net Income/(Loss) (3.9) (4.8) (4.3) Basic & Diluted Shares (millions) Adjusted Net Income/(Loss) Per Basic & Diluted Share ($0.03) ($0.04) ($0.03) Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 38

39 2016 Full Year Non-GAAP Guidance ($ in millions, except EPS) 2015 Act 2016 Guidance Low High Bookings $242.2 $195.0 $202.0 Adjusted Gross Margin 61.6% 61.9% 61.9% Adjusted Operating Expense Adjusted Operating Income/(Loss) 13.9 (21.6) (19.1) Depreciation Addback Adjusted EBITDA $16.8 ($19.0) ($16.5) Adjusted Net Income/(Loss) 13.8 (21.8) (19.3) Basic Shares (millions) Diluted Shares (millions) Adjusted Net Income/(Loss) Per Basic Share $0.12 ($0.17) ($0.15) Adjusted Net Income/(Loss) Per Diluted Share $0.11 ($0.17) ($0.15) Cash and ST Investments Balance $180.5 $125.0 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 39

40 Key Statistics Market Statistics (as of July 29, 2016) (in millions except per share and volume data) Stock Price $ Week High $ Week Low $1.98 Shares Outstanding Avg. Daily Volume (last 90 days) 1,863,816 Market Capitalization $310.8 Debt $0 Cash $158.0 Enterprise Value $152.8 Shares Outstanding is as of July 29, 2016 Cash balance is as of June 30, 2016 Average Daily Volume is calculated using the last 90 calendar days Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 40

41 Investment Highlights Diversified portfolio of franchises Long-tail social and evergreen games provide visibility Strengthened studio and technology leadership Strong balance sheet with no debt Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 41

42 Non-GAAP Reconciliations Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 42

43 Q216 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Adjusted Results Reconciliation (in thousands, except per share data) (unaudited) Three Months Ended June 30, 2016 GAAP Results Change in deferred revenue and litigation settlement proceeds Change in deferred platform commissions and royalty expense Amortization of intangible assets Stock-based compensation Restructuring charge Non-cash warrant expense Change in fair value of strategic investments Foreign currency exchange gain Adjusted Results Revenue $ 48,363 $ 2,575 $ - $ - $ - $ - $ - $ - $ - $ 50,938 Cost of revenue: Platform commissions, royalties and other 18, ,019 Amortization of intangible assets 2, (2,336) Total cost of revenue 20, (2,336) ,019 Gross profit 27,388 2,575 (348) 2, (32) ,919 Operating expenses: Research and development 20, (837) ,884 Sales and marketing 10, (191) ,744 General and administrative 7, (1,933) ,163 Restructuring charge 2, (2,116) Total operating expenses 40, (2,961) (2,116) ,791 Loss from operations (13,480) 2,575 (348) 2,336 2,961 2,116 (32) - - (3,872) Interest and other income, net: (4,453) ,660 (182) 25 Loss before income taxes (17,933) 2,575 (348) 2,336 2,961 2,116 (32) 4,660 (182) (3,847) Income tax benefit (16) (16) Net loss $ (17,949) $ 2,575 $ (348) $ 2,336 $ 2,961 $ 2,116 $ (32) $ 4,660 $ (182) $ (3,863) Net loss per share - basic and diluted $ (0.14) $ (0.03) Number of shares used in computation - basic and diluted $ 131,198 $ 131,198 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 43

44 Q215 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Adjusted Results Reconciliation (in thousands, except per share data) (unaudited) GAAP Results Change in deferred revenue Change in deferred platform commissions and royalty expense Amortization of intangible assets Three Months Ended June 30, 2015 Stock-based compensation Litigation costs Non-cash warrant expense Foreign currency exchange loss Adjusted Results Revenue $ 56,150 $ 1,329 $ - $ - $ - $ - $ - $ - $ 57,479 Cost of revenue: Platform commissions, royalties and other 21, (135) - 21,506 Amortization of intangible assets 2, (2,434) Total cost of revenue 23, (2,434) - - (135) - 21,506 Gross profit 32,396 1,329 (321) 2, ,973 Operating expenses: Research and development 18, (836) ,472 Sales and marketing 12, (282) ,489 General and administrative 7, (1,914) (476) - - 5,039 Amortization of intangible assets (32) Total operating expenses 38, (32) (3,032) (476) ,000 Income/(loss) from operations (6,144) 1,329 (321) 2,466 3, Interest and other income/(expense), net: (174) Income/(loss) before income taxes (6,318) 1,329 (321) 2,466 3, Income tax provision Net income/(loss) $ (5,509) $ 1,329 $ (321) $ 2,466 $ 3,032 $ 476 $ 135 $ 186 $ 1,794 Net loss per share - basic and diluted $ (0.05) Earnings per share Basic $ 0.02 Diluted $ 0.01 Number of shares used in computation - basic and diluted $ 116,169 Number of shares used in computation 116,169 Basic 122,538 Diluted Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 44

45 YTD 2016 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Adjusted Results Reconciliation (in thousands, except per share data) (unaudited) Six Months Ended June 30, 2016 GAAP Results Change in deferred revenue and litigation settlement proceeds Change in deferred platform commissions and royalty expense Amortization of intangible assets Stock-based compensation Retsructuring charge Non-cash warrant expense / (benefit) Change in fair value of strategic investments Foreign currency exchange gain Adjusted Results Revenue $ 102,892 $ 2,044 $ - $ - $ - $ - $ - $ - $ - $ 104,936 Cost of revenue: Platform commissions, royalties and other 39,002 - $ 1, $ ,049 Amortization of intangible assets 4,660 - ` $ (4,660) Total cost of revenue 43,662-1,025 (4,660) ,049 Gross profit 59,230 2,044 (1,025) 4, (22) ,887 Operating expenses: Research and development 41, (2,032) ,001 Sales and marketing 23, (483) ,076 General and administrative 15, (3,992) ,089 Restructuring charge 2, (2,221) Total operating expenses 81, (6,507) (2,221) ,166 Loss from operations (22,664) 2,044 (1,025) 4,660 6,507 2,221 (22) - - (8,279) Interest and other income, net: (3,985) ,360 (330) 45 Loss before income taxes (26,649) 2,044 (1,025) 4,660 6,507 2,221 (22) 4,360 (330) (8,234) Income tax benefit Net loss $ (26,498) $ 2,044 $ (1,025) $ 4,660 $ 6,507 $ 2,221 $ (22) $ 4,360 $ (330) $ (8,083) Net loss per share - basic and diluted $ (0.20) $ (0.06) Number of shares used in computation - basic and diluted $ 131,198 $ 131,198 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 45

46 YTD 2015 GAAP to Non-GAAP Reconciliation Condensed Consolidated Statements of Operations GAAP to Adjusted Results Reconciliation (in thousands, except per share data) (unaudited) Six Months Ended June 30, 2015 GAAP Results Change in deferred revenue Change in deferred platform commissions and royalty expense Amortization of intangible assets Stock-based compensation Transitional costs Non-cash warrant expense Litigation costs Foreign currency exchange loss Adjusted Results Revenue $ 125,620 $ (5,694) $ - $ - $ - $ - $ - $ - $ - $ 119,926 Cost of revenue: Platform commissions, royalties and other 47,630 - (2,498) (228) ,904 Amortization of intangible assets 4, (4,868) Total cost of revenue 52,498 - (2,498) (4,868) - - (228) ,904 Gross profit 73,122 (5,694) 2,498 4, ,022 Operating expenses: Research and development 36, (1,596) ,955 Sales and marketing 25, (500) ,709 General and administrative 14, (3,065) (72) - (476) - 11,222 Amortization of intangible assets (159) Total operating expenses 76, (159) (5,161) (72) - (476) - 70,886 Income/(loss) from operations (3,632) (5,694) 2,498 5,027 5, ,136 Interest and other income/(expense), net: (458) Income (loss) before income taxes (4,090) (5,694) 2,498 5,027 5, ,154 Income tax (295) (295) Net income/(loss) $ (4,385) $ (5,694) $ 2,498 $ 5,027 $ 5,161 $ 72 $ 228 $ 476 $ 476 $ 3,859 Net loss per share - basic and diluted $ (0.04) Earnings per share Basic $ 0.04 Diluted $ 0.03 Number of shares used in computation - basic and diluted 110,019 Number of shares used in computation Basic 110,019 Diluted 115,195 Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 46

47 Adjusted EBITDA Reconciliation Glu Mobile Inc. Adjusted EBITDA (in thousands) (unaudited) For the Three Months Ended March 31, June 30, September 30, December 31, March 31, June 30, GAAP net income/(loss) $ 1,124 $ (5,509) $ 158 $ (2,958) $ (8,550) $ (17,949) Change in deferred revenue and litigation settlement proceeds (7,023) 1,329 1,174 (3,135) (530) 2,575 Change in deferred platform commissions and royalty expense 2,819 (321) (780) 1,497 (676) (348) Non-cash warrant expense / (benefit) ,896 (116) 9 (32) Amortization of intangible assets 2,561 2,466 2,391 2,336 2,324 2,336 Depreciation Stock-based compensation 2,129 3,032 3,056 3,469 3,545 2,961 Transitional costs Litigation costs and settlement proceeds (390) Restructuring charge , ,116 Foreign currency exchange (gain)/loss (148) (182) Change in fair value of strategic investments (300) 4,660 Interest and other expense (6) (12) (15) (15) (21) (25) Income tax provision/(benefit) 1,104 (809) 79 (234) (166) 16 Total Adjusted EBITDA $ 3,869 $ 1,705 $ 8,454 $ 2,774 $ (3,751) $ (3,152) Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 47

48 Key Operating Metrics Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Total Bookings (in millions) $47.0 $35.0 $83.6 $76.2 $62.4 $57.5 $64.4 $57.9 $54.0 $50.9 Total Bookings Growth Q/Q 10% (25%) 138% (9%) (18%) (8%) 12% (10%) (7%) (6%) Total Bookings Growth Y/Y 90% 51% 270% 78% 33% 64% (23%) (24%) (14%) (11%) Original IP % of Total Bookings 91% 93% 37% 41% 43% 41% 38% 50% 43% 37% Platform Commissions (in millions) $11.9 $8.2 $21.4 $19.4 $16.0 $14.2 $16.1 $13.7 $13.7 $12.6 Royalties (in millions) Hosting and other COGS (in millions) Total Cost of Bookings (in millions) $14.4 $10.9 $33.7 $29.7 $23.4 $21.5 $26.3 $21.7 $21.0 $19.0 Adjusted Operating Expenses (in millions) $26.7 $25.6 $35.0 $33.1 $35.9 $35.0 $30.4 $34.1 $37.4 $35.8 Marketing Expense (in millions) Marketing as % of Total Bookings 15% 16% 15% 13% 16% 18% 17% 14% 19% 17% Adjusted EBITDA (in millions) 6.5 (0.9) (3.8) (3.2) Headcount** (at quarter-end) Daily Active Users (DAU)* (in millions) Monthly Active Users (MAU)* (in millions) Installs (in millions) Cumulative Installs (in millions) , , , , , ,417.3 In-App Purchase Billable Transactions (in millions)*** Average Bookings per Billable Transaction*** $11.79 $11.84 $9.14 $9.31 $10.06 $9.78 $8.91 $9.44 $9.15 $9.61 *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 booking per billable transaction has been revised to include the impact of Cie Games activity after its acquisition on August 20, 2014; Q115 and Q215 in-app purchase billable transactions and average bookings per billable transaction have been revised to reflect corrected data Glu Mobile Q Earnings Glu Mobile Inc. Proprietary Page 48