Glu Mobile Inc. (GLUU) filed Quarterly Report for the period ended 2009-09-30.
GLU MOBILE INC., is a leading global publisher of mobile games. Its portfolio of top-rated games includes original titles Super K.O. Boxing!, Stranded and Brain Genius, and titles based on major brands from partners including Atari, Activision, Konami, Harrah's, Hasbro, Warner Bros., Microsoft, PlayFirst, PopCap Games, SEGA and Sony. Glu is based in San Mateo, Calif. and has offices in London, France, Germany, Spain, Italy, Sweden, Poland, Russia, Hong Kong, China, Brazil, Chile, Canada and San Clemente, Calif. Glu Mobile Inc. has a market cap of $29.93 million; its shares were traded at around $1.01 with and P/S ratio of 0.33.
Highlight of Business Operations:
Our net loss in the three months ended September 30, 2009 was $4.0 million versus a net loss of $56.9 million in the three months ended September 30, 2008. This decrease was driven primarily by a decrease in operating expenses of $51.9 million, including $46.6 million from a reduction in goodwill impairment charges from the third quarter of 2008, a decrease in costs of revenues of $3.7 million, a decrease in interest and other expense of $1.6 million, which was partially offset by a $4.2 million reduction in revenues. Our net loss in the nine months ended September 30, 2009 was $11.3 million versus a net loss of $69.5 million in the nine months ended September 30, 2008. This decrease was driven primarily by a decrease in operating expenses of $62.3 million, including $46.6 million from a reduction in goodwill impairment charges from the third quarter of 2008, a decrease in costs of revenues of $3.3 million, a decrease in interest and other expense of $731,000, which was partially offset by a $7.9 million reduction in revenues. The decreases in our operating expenses in the three and nine months ended September 30, 2009 compared with the corresponding periods in 2008 were in part due to the headcount reductions and related measures that we took in connection with the restructurings that we implemented in both the third and fourth quarters of 2008 and the third quarter of 2009 and the restructuring that we implemented in connection with our acquisition of Superscape. Our operating results are also affected by fluctuations in foreign currency exchange rates of the currencies in which we incur meaningful operating expenses (principally the British Pound Sterling, Chinese Renminbi, Brazilian Real and Russian Ruble) and our customers’ reporting currencies, as we transact business in more than 70 countries in more than 20 different currencies, and in 2008 and the first nine months of 2009, some of these currencies fluctuated by up to 40%.
Cash and cash equivalents at September 30, 2009 totaled $9.9 million, a decrease of $9.3 million from $19.2 million at December 31, 2008. This decrease was primarily due to $14.0 million in principal that we paid during the first nine months of 2009 with respect to the promissory notes that we issued to the MIG shareholders that are discussed in further detail in “Significant Transactions” below. We also recognized a $5.4 million decrease in our accrued royalties and a $2.5 million reduction in our accounts payables. These cash outflows were partially offset by net proceeds excluding interest of $4.1 million from the borrowings under our credit facility, a $5.2 million decrease in our prepaid royalties and a $3.9 million decrease in accounts receivable, which was partially due to better than expected collections and lower revenues. We believe our cash and cash equivalents, together with cash flows from operations and borrowings under our credit facility, will be sufficient to meet our anticipated cash needs for at least the next 12 months.
Our research and development expenses decreased $2.6 million, or 27.8%, from $9.2 million in the three months ended September 30, 2008 to $6.7 million in the three months ended September 30, 2009. The decrease in research and development costs was primarily due to decreases in salaries and benefits of $975,000 due to reduced headcount and movement of employees to lower cost locations, outside services costs of $695,000 due to a reduction in third-party outside services costs for porting and external development and facility and overhead costs of $569,000 due to reduced headcount. We decreased our research and development staff from 454 employees at September 30, 2008 to 409 as of September 30, 2009, and salaries and benefits decreased as a result. As a percentage of revenues, research and development expenses declined from 38.6% for the three months ended September 30, 2008 compared to 33.9% for the three months ended September 30, 2009. Research and development expenses included $166,000 of stock-based compensation expense in the three months ended September 30, 2009 and $261,000 in the three months ended September 30, 2008.
Our sales and marketing expenses decreased $2.4 million, or 40.8%, from $6.0 million in the three months ended September 30, 2008 to $3.6 million in the three months ended September 30, 2009. The decrease was primarily due to a decrease in stock-based compensation of $1.1 million primarily related to the MIG stock-based compensation earnout being fully expensed, a $622,000 decrease in the MIG earnout expense due to lower amortization associated with reaching the end of the vesting terms and conditions, a $375,000 decrease in salaries, benefits, variable compensation and expatriate costs as we reduced our sales and marketing headcount from 73 at September 30, 2008 to 66 at September 30, 2009, a $140,000 decrease in marketing and promotion costs and a $118,000 decrease in allocated facility and overhead costs. As a percentage of revenues, sales and marketing expenses decreased from 25.1% in the three months ended September 30, 2008 to 18.1% in the three months ended September 30, 2009. Sales and marketing expenses included $170,000 of stock-based compensation expense in the three months ended September 30, 2009 and $1.3 million in the three months ended September 30, 2008.
Our general and administrative expenses decreased $1.1 million, or 21.6%, from $5.1 million in the three months ended September 30, 2008 to $4.0 million in the three months ended September 30, 2009. The decrease in general and administrative expenses was primarily due to a $468,000 decrease in salaries and benefits, a $294,000 decrease in professional and consulting fees and a $230,000 decrease in stock-based compensation. We decreased our general and administrative headcount from 72 at September 30, 2008 to 71 at September 30, 2009 but our salaries and benefits decreased primarily as a result of moving headcount to lower cost locations. As a percentage of revenues, general and administrative expenses decreased from 21.3% in the three months ended September 30, 2008 to 20.3% in the three months ended September 30, 2009. General and administrative expenses included $338,000 of stock-based compensation expense in the three months ended September 30, 2009 and $569,000 in the three months ended September 30, 2008.
Our research and development expenses decreased $4.9 million, or 19.9%, from $24.6 million in the nine months ended September 30, 2008 to $19.7 million in the nine months ended September 30, 2009. The decrease in research and development costs was primarily due to decreases in salaries and benefits of $1.9 million, a reduction in third-party outside services costs for porting and external development of $1.4 million and facility and overhead costs of $1.2 million due to reduced headcount. We decreased our research and development staff from 454 employees at September 30, 2008 to 409 as of September 30, 2009, and salaries and benefits decreased as a result. As a percentage of revenues, research and development expenses declined from 36.1% for the nine months ended September 30, 2008 compared to 32.7% for the nine months ended September 30, 2009. Research and development expenses included $546,000 of stock-based compensation expense in the nine months ended September 30, 2009 and $511,000 in the nine mont
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