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Glu Mobile (GLUU) Q2 Earnings Lag Estimates, Revenues Up Y/Y

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Glu Mobile (GLUU - Free Report) reported second-quarter 2018 loss of 3 cents per share, narrower than a loss of 17 cents in the year-ago quarter.

The Zacks Consensus Estimate was pegged at earnings of 5 cents per share.

Revenues came in at $90.2 million compared with $68.7 million in the year-ago quarter.

Net bookings came in at $99.4 million, up 20.5% year over year, primarily driven by strength in Design Home, Tap Sports Baseball, and Covet Fashion.

Quarter Details

Glu’s growth games portfolio, which includes Design Home, Tap Sports Baseball franchise and Covet Fashion, contributed 76% of the total bookings, up 26.6% from the year-ago period.

In the reported quarter, Design Home recorded bookings of $38.2 million, up 70% year over year driven by strong in-game purchases and new users.

Tap Sports Baseball (TSB) franchise witnessed record bookings of $24.4 million, up 48% from the year-ago quarter.

Covet Fashion bookings grew 21% year over year to $13 million.

Glu’s evergreen game (22% of total bookings) Kim Kardashian: Hollywood recorded 7.8 million bookings in the reported quarter. However, contribution from legacy game portfolio remained minimal at 2% of total bookings.

The company’s advertisement revenues (13.1% of total revenues) came in at $13 million on the back of ads placed in TSB’18.

Revenues from North America region (84% of total net bookings) continued to contribute significantly, delivering $83 million net bookings in the reported quarter.

In-app purchases remained the main driver of net bookings with 87% of total net bookings in the reported quarter.

Glu Mobile Inc. Price, Consensus and EPS Surprise

Glu Mobile Inc. Price, Consensus and EPS Surprise | Glu Mobile Inc. Quote

Operating Details

Glu’s gross margin expanded 320 bps on a year-over-year basis to 62.5%

Adjusted operating expenses decreased 6% year over year to $54.8 million due to divestitures and studio shutdowns.

Adjusted research & development, sales & marketing and general & administration expenses declined 2%, 5%, and 17% respectively year over year.

Balance Sheet

As of Jun 30, 2018, Glu had cash and cash equivalents of $161.5 million compared with $48.3 million as of Mar 31, 2018.

Operating cash flow in the quarter was $12.3 million while free cash flow came was $11.6 million.

Guidance

For third-quarter 2018, Glu expects booking in the range of $94-$96 million. Adjusted operating expense is expected to be $30.1 million.

For 2018, management expects bookings in the range of $374-$378 million. Adjusted operating expense is expected to be $119.3 million while cash and cash equivalents are expected to be $85 million.

Zacks Rank & Stocks to Consider

Glu currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader consumer discretionary sector include AMC Networks (AMCX - Free Report) , Penn National (PENN - Free Report) and Activision (ATVI - Free Report) . While AMC Networks sports a Zacks Rank #1 (Strong Buy), Penn Nation and Activision carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for AMC Networks, Penn National and Activision is projected to be 7.16%, 10% and 15.41%, respectively.

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