Glu Mobile 2008 Earnings...Hoping For a Less Sticky 2009

I look forward to Glu Mobile's (GLUU) quarterly earnings calls like kids look forward to Christmas. Because they are one of the larger public mobile pure-play companies the calls are a great barometer of the overall state of the mobile games business and always feature lots of valuable mobile business data points. Moreover, I think all of us vested in the health of the market for mobile games based on entertainment IP desperately want to Glu Mobile to succeed. Here are the key take-aways:

2008

• Q4 2008 Rev = $21.6 mil Net Loss = 37.8 mil
• FY 2008 Rev = $89.8 mil Net Loss = 107 mil (ouch!)
• 34% increase in Revs over 2007
• Top 4 carriers = 42% of Revs, Verizon was a whopping 23%
• Non-carrier business (iPhone, Android, N-Gage) was insignificant in 2008
• 54% North America 27% EMEA 19% Rest of World (10% China)

2009

• Q1 2009 Estimate Rev = $18 mil to 18.5 mil Estimated Net Loss =$6.7 mil to $7.1 mil
• FY 2009 Estimated Rev = $76 mil (15% decrease!) Estimated Net Loss = $16.6 mil to $19.6 mil
• $19.2 mil in cash on hand at end of FY 2008
• Plan is to be Cash Flow Positive in 2009 (Profitability is clearly off the table)
• 75% - 80% of IP for 2009 games will be licensed...big movie titles for 2009 are Watchmen & Ice Age 3
• Glu Mobile will release fewer titles in 2009 than 2008 (more like 2007 volume)
• The Dark Knight: Batmobile (co-Published with WB) got as far as 8th place in the iTunes App Store giving Glu Mobile the ability to model Rev potential of a Top 10 title in that channel
• 30% to 40% of Glu Mobile's development capability is focused on iPhone, N-Gage and Android
• Headcount is currently 560

DATA NUGGETS (all this is from Glu Mobile's perspective)

• The global economic downturn is hurting mobile games business as consumers curtail new handset purchases (most games purchases happen in first 90days of ownership)
• Consumers are migrating to Smartphones (see Cabana's Trend Watch)
• 17 mil iPhones Worldwide (additionally iPod Touch is a factor in App Store games). iPhone has the highest tie ratio to games purchases of all handsets (2nd is BlackBerry Pearl)
• Richer merchandising environment in iTunes App Store means non-established brands can flourish
• iPhone App Store is allowing smaller publishers enter the business, but ultimately larger companies that stay focused on the platform will consolidate market share (as happened on carrier decks)
• Executives at the carriers are paying more attention games due to there success on iPhone, but this is not yet being reflected in marketing initiatives