Glu Mobile Inc. (GLUU, Financial) filed Quarterly Report for the period ended 2010-03-31.
Glu Mobile Inc. has a market cap of $43 million; its shares were traded at around $1.42 with and P/S ratio of 0.5. GLUU is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Our revenues decreased $3.5 million, or 16.8%, from $20.8 million for the three months ended March 31, 2009 to $17.3 million for the three months ended March 31, 2010. This decrease was primarily driven by a decline in feature phones sold in the channel relating to our traditional carrier business, which in turn led to a decrease in the number of games that we sold, and a migration of users from feature phones to smartphones where we were unable to capture the same market share as we have in our traditional carrier business. This was partially offset by foreign currency exchange rates which had a more favorable impact on our revenues for the three months ended March 31, 2010 compared to the three months ended March 31, 2009. International revenues (defined as revenues generated from carriers whose principal operations are located outside the United States) decreased by $1.8 million, from $10.8 million in the three months ended March 31, 2009 to $9.0 million in the three months ended March 31, 2010. This was primarily related to a $800,000 decrease in our APAC revenues due to $700,000 of one time revenues recorded from an APAC customer in the first quarter of 2009 and a decrease in our revenue share arrangements with China Mobile, which accounts for approximately 90% of our revenues in China. In the first quarter of 2010, China Mobile reduced the revenue share for all publishers, including us, in 15 provinces for its mBox platform. We expect our 2010 revenues to be lower than our 2009 revenues primarily as a result of the anticipated acceleration of the slowdown in the sale of our games on feature phones in our base carrier business as consumers increasingly migrate from traditional feature phones to more advanced platforms and smartphones. Although we expect our revenues from games designed for smartphones to increase in 2010, we do not expect this increase to fully offset the anticipated decline in revenues from feature phones.
Our research and development expenses increased $264,000, or 4.1%, from $6.4 million in the three months ended March 31, 2009 to $6.7 million in the three months ended March 31, 2010. The increase in research and development costs was primarily due to increases in salaries and benefits of $203,000 associated with higher executive bonuses and an increase in allocated facilities and overhead costs of $344,000, which was partially offset by a $234,000 decrease in outside services costs due to a reduction in third-party costs for porting and external development. We decreased our research and development staff from 422 employees at March 31, 2009 to 365 as of March 31, 2010; however the majority of these staff reductions occurred during March 2010. As a percentage of revenues, research and development expenses increased from 30.8% for the three months ended March 31, 2009 compared to 38.5% for the three months ended March 31, 2010. Research and development expenses included $164,000 of stock-based compensation expense in the three months ended March 31, 2010 and $180,000 in the three months ended March 31, 2009.
Our sales and marketing expenses decreased $1.1 million, or 27.7%, from $4.1 million in the three months ended March 31, 2009 to $3.0 million in the three months ended March 31, 2010. The decrease was primarily due to a $656,000 decrease in the MIG earnout expense due to lower amortization of stock-based compensation associated with reaching the end of the vesting terms and conditions, a $342,000 decrease in salaries, benefits, variable compensation and expatriate costs as we reduced our sales and marketing headcount from 67 at March 31, 2009 to 54 at March 31, 2010, and a $78,000 decrease in stock-based compensation costs due to reduced headcount. As a percentage of revenues, sales and marketing expenses decreased from 19.8% in the three months ended March 31, 2009 to 17.2% in the three months ended March 31, 2010. Sales and marketing expenses included $73,000 of stock-based compensation expense in the three months ended March 31, 2010 and $151,000 in the three months ended March 31, 2009.
Our general and administrative expenses decreased $672,000, or 15.0%, from $4.5 million in the three months ended March 31, 2009 to $3.8 million in the three months ended March 31, 2010. The decrease in general and administrative expenses was primarily due to a $393,000 decrease in facility and overhead costs, a $195,000 decrease in professional and consulting fees and a $146,000 decrease in stock-based compensation. We decreased our general and administrative headcount from 68 at March 31, 2009 to 60 at March 31, 2010. As a percentage of revenues, general and administrative expenses increased from 21.6% in the three months ended March 31, 2009 to 22.1% in the three months ended March 31, 2010. General and administrative expenses included $287,000 of stock-based compensation expense in the three months ended March 31, 2010 and $433,000 in the three months ended March 31, 2009.
For the three months ended March 31, 2010, net cash provided by operating activities was $1.6 million, primarily due to a decrease in accounts receivable of $2.3 million due to declining sales in our carrier business and improved cash collections, a $1.4 million decrease in our prepaid royalties and a $708,000 increase in accrued compensation. In addition, we had adjustments for non-cash items, including amortization expense of $1.3 million, depreciation expense of $563,000, stock-based compensation expense of $524,000, non-cash foreign currency re-measurement loss of $332,000 and interest expense on debt of $265,000. These amounts were partially offset by a net loss of $3.7 million, a decrease in accrued royalties of $2.4 million and a decrease in accrued restructuring charges of $582,000 due to severance payments made to our former CEO.
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Glu Mobile Inc. has a market cap of $43 million; its shares were traded at around $1.42 with and P/S ratio of 0.5. GLUU is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Our net loss in three months ended March 31, 2010 was $3.7 million versus a net loss of $5.8 million in the three months ended March 31, 2009. This decrease was driven primarily by a decrease in cost of revenues of $2.7 million, a decrease in income tax provision of $1.7 million, a decrease in operating expenses of $951,000 and a decrease in interest and other expense of $176,000, which was partially offset by a $3.5 million reduction in revenues. The decrease in our operating expense for the three months ended March 31, 2010 compared with the three months ended March 31, 2009 was 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 quarter of 2009 and the first quarter of 2010. 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 2009 and the first three months of 2010, some of these currencies fluctuated by up to 40%.Our revenues decreased $3.5 million, or 16.8%, from $20.8 million for the three months ended March 31, 2009 to $17.3 million for the three months ended March 31, 2010. This decrease was primarily driven by a decline in feature phones sold in the channel relating to our traditional carrier business, which in turn led to a decrease in the number of games that we sold, and a migration of users from feature phones to smartphones where we were unable to capture the same market share as we have in our traditional carrier business. This was partially offset by foreign currency exchange rates which had a more favorable impact on our revenues for the three months ended March 31, 2010 compared to the three months ended March 31, 2009. International revenues (defined as revenues generated from carriers whose principal operations are located outside the United States) decreased by $1.8 million, from $10.8 million in the three months ended March 31, 2009 to $9.0 million in the three months ended March 31, 2010. This was primarily related to a $800,000 decrease in our APAC revenues due to $700,000 of one time revenues recorded from an APAC customer in the first quarter of 2009 and a decrease in our revenue share arrangements with China Mobile, which accounts for approximately 90% of our revenues in China. In the first quarter of 2010, China Mobile reduced the revenue share for all publishers, including us, in 15 provinces for its mBox platform. We expect our 2010 revenues to be lower than our 2009 revenues primarily as a result of the anticipated acceleration of the slowdown in the sale of our games on feature phones in our base carrier business as consumers increasingly migrate from traditional feature phones to more advanced platforms and smartphones. Although we expect our revenues from games designed for smartphones to increase in 2010, we do not expect this increase to fully offset the anticipated decline in revenues from feature phones.
Our research and development expenses increased $264,000, or 4.1%, from $6.4 million in the three months ended March 31, 2009 to $6.7 million in the three months ended March 31, 2010. The increase in research and development costs was primarily due to increases in salaries and benefits of $203,000 associated with higher executive bonuses and an increase in allocated facilities and overhead costs of $344,000, which was partially offset by a $234,000 decrease in outside services costs due to a reduction in third-party costs for porting and external development. We decreased our research and development staff from 422 employees at March 31, 2009 to 365 as of March 31, 2010; however the majority of these staff reductions occurred during March 2010. As a percentage of revenues, research and development expenses increased from 30.8% for the three months ended March 31, 2009 compared to 38.5% for the three months ended March 31, 2010. Research and development expenses included $164,000 of stock-based compensation expense in the three months ended March 31, 2010 and $180,000 in the three months ended March 31, 2009.
Our sales and marketing expenses decreased $1.1 million, or 27.7%, from $4.1 million in the three months ended March 31, 2009 to $3.0 million in the three months ended March 31, 2010. The decrease was primarily due to a $656,000 decrease in the MIG earnout expense due to lower amortization of stock-based compensation associated with reaching the end of the vesting terms and conditions, a $342,000 decrease in salaries, benefits, variable compensation and expatriate costs as we reduced our sales and marketing headcount from 67 at March 31, 2009 to 54 at March 31, 2010, and a $78,000 decrease in stock-based compensation costs due to reduced headcount. As a percentage of revenues, sales and marketing expenses decreased from 19.8% in the three months ended March 31, 2009 to 17.2% in the three months ended March 31, 2010. Sales and marketing expenses included $73,000 of stock-based compensation expense in the three months ended March 31, 2010 and $151,000 in the three months ended March 31, 2009.
Our general and administrative expenses decreased $672,000, or 15.0%, from $4.5 million in the three months ended March 31, 2009 to $3.8 million in the three months ended March 31, 2010. The decrease in general and administrative expenses was primarily due to a $393,000 decrease in facility and overhead costs, a $195,000 decrease in professional and consulting fees and a $146,000 decrease in stock-based compensation. We decreased our general and administrative headcount from 68 at March 31, 2009 to 60 at March 31, 2010. As a percentage of revenues, general and administrative expenses increased from 21.6% in the three months ended March 31, 2009 to 22.1% in the three months ended March 31, 2010. General and administrative expenses included $287,000 of stock-based compensation expense in the three months ended March 31, 2010 and $433,000 in the three months ended March 31, 2009.
For the three months ended March 31, 2010, net cash provided by operating activities was $1.6 million, primarily due to a decrease in accounts receivable of $2.3 million due to declining sales in our carrier business and improved cash collections, a $1.4 million decrease in our prepaid royalties and a $708,000 increase in accrued compensation. In addition, we had adjustments for non-cash items, including amortization expense of $1.3 million, depreciation expense of $563,000, stock-based compensation expense of $524,000, non-cash foreign currency re-measurement loss of $332,000 and interest expense on debt of $265,000. These amounts were partially offset by a net loss of $3.7 million, a decrease in accrued royalties of $2.4 million and a decrease in accrued restructuring charges of $582,000 due to severance payments made to our former CEO.
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