More Robust China Results Boost Glu Mobile Q1

The company disclosed in March that sales of some Hasbro classic titles had been continued through that month -- later than previously expected. That “contributed modest additional one-time game download revenue incremental” to the company’s previous estimate for Q1, it said. The company saw “a rebound” in European sales, but warned that the region remains a “challenging” market because it’s so “fragmented.”

Overall Q1 revenue grew to $20.6 million from $15.7 million a year ago. Glu’s loss widened to $6 million, 21 cents per share, from $764,000, 12 cents, due to restructuring and other charges, as well as costs related to acquiring rivals Superscape in the U.K. and Beijing Zhangzhong MIG Information Technology in China.

Glu is “already reaping the benefits” of buying MIG, interim Chief Financial Officer Eric Ludwig said, noting the better-than-expected results in China. Glu also is making “excellent progress” at integrating MIG and Superscape into its operations, Ballard said. That, combined with Glu’s strong game release slate for the rest of 2008 and “continued operational discipline position us to increase significantly our global market share in the coming months and quarters,” Ballard said.

The company’s top 10 games represented about 43 percent of revenue in Q1, down from about 57 percent a year ago, it said. But the average revenue per top 10 title was $886,000, about flat with last year, it said.

New games released in Q1 included Age of Empires III, based on the popular Microsoft strategy franchise, Solitaire Pop, developed by PlayFirst, and original titles from Glu that include Space Monkey and CrossPix. No title accounted for more than 10 percent of Glu’s Q1 revenue, Ludwig told analysts.

Verizon remained Glu’s No. 1 carrier in sales during Q1 in the U.S. and worldwide, Ballard said. Verizon accounted for 20 percent of Glu Q1 revenue, down two percentage points from a year earlier, while Vodafone grew to 10.3 percent of sales, Ludwig said. Glu’s top four carriers, which included China Mobile for the first time, accounted for 47 percent of Glu total revenue, about the same as a year earlier, Ludwig said.

Glu recently launched a Speed Racer mobile game but said it was too soon to gauge how that’s doing. The Speed Racer film that opened theatrically Friday didn’t perform as well as Warner Bros. and many film industry observers expected, Glu expects the game “will do well even if” the movie performs weakly at the box office, because it was an established “brand of its own,” based on 1960s animated cartoons, it said. The company Tuesday announced the launch of Mystery Case Files: Agent X, the latest entry in the Mystery Case Files series, in North America. It was developed for Glu by Big Fish Games.

Glu plans to publish twice as many games in the second half of 2008 as in the first, Ballard told analysts. But few specifics were provided. The company had said it planned to launch a mobile game in October licensed from DreamWorks Animation and based on coming movie Madagascar: Escape 2 Africa (CED March 25 p7).

Better-than-expected Q1 sales caused Glu to boost its revenue forecast for the 2008 fiscal year, Ballard told analysts. The company now expects sales of $96.5 million to $100 million for 2008, up from the $83 million to $87 million projection it gave in February (CED Feb 13 p8). But the call played down company expectations of a wider fiscal year loss -- $18.1 million, 61 cents per share, to $19.2 million, 65 cents, not the $9.2 million, 31 cents, to $10.7 million, 36 cents, loss estimated in February. For Q2 ending June 30, Glu expects to report sales of $23.5 million to $24 million and a loss of $6.5 million, 22 cents per share, to $7 million, 24 cents. The company’s shares were up 5.84 percent at $4.35 in late afternoon trading.