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PocketGamer.biz18 Aug 2015

Biz Daily: Glu Mobile hit by maturing Kim Kardashian audience

Key insights

6 takeaways

01
Glu Mobile reported a 19% revenue decline to $56.2 million in Q2 2015, shifting from a $1.1 million profit to a $5.5 million loss.
02
Despite operational losses, Glu Mobile maintains a strong liquidity position with $190 million in cash reserves, bolstered by a $120 million strategic investment from Tencent.
03
Glu Mobile is utilizing its cash reserves to aggressively pursue new celebrity licensing deals to diversify its portfolio and reduce reliance on the Kim Kardashian franchise.
04
The financial downturn is driven by the maturation and user churn of the 'Kim Kardashian: Hollywood' title, which currently generates one-third of the company's total sales.
05
Upcoming games featuring Katy Perry and Britney Spears are scheduled for release between late 2015 and early 2016 to serve as the primary catalysts for future growth.
06
The company is currently in a transitional phase, relying on its existing game library while awaiting the release of new celebrity-branded titles.

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Transcript

hello and welcome to biz daily i'm john jordan so today we're looking at glue mobile's financial figures it's just announced it to q2 figures that's its figures for april may and june 2015 so headline figures we always look at the gap revenues generally accepted accounting practices um so for the period glue made sales i had sales of 56.2 million dollars so that's actually down 19 um compared to the period january february march so not so good there um equally for that uh i guess kind of was going to a similar reason um blue actually made a loss of 5.5 million dollars during the period that compares to a profit of uh 1.1 million in the previous quarter so both those are kind of going in the wrong direction really for glue the good news for glue is that its

cash pile rose significantly so glue now has 190 million dollars in cash and the reason for that uh was that it's just completed it's uh an investment from 10 cent which is the biggest games company in the world um it tends to a chinese company massive in pc games done a lot of strategic investments in people like epic games and heavily to mobile as well now and it's done investment into glue and that's just closed and that's giving glue another about 120 million dollars so even if glue makes a loss uh we'll probably make a loss for another probably next quarter as well and there's roomatic it's got so much kind of cash in hand that it's um actually in investment mode and we're kind of seeing this with glue at the moment doing a lot of licensing deals so just sign a deal what else it's got kind of katy perry and britney spears and something kind of signing up for new celebrity type deals um because of the success of its kim kardashian game and that's really the the kind of underpinning reason um why glue's sales are down so the kim kim kardashian

hollywood game came out um just over a year ago so the first quarter that uh glue had all the sails from from king kardashian because it was actually his q3 figure and that's kind of where it sails exploded so king foundation is about a third of glue's sales at the moment and so kind of a year ago for the next course a year ago um that's the sales took off then so um and every quarter since then um glue sales have been in decline i mean relative decline it's declined to its highest peak ever when kim kardashian launched um so we kind of kind of have to put it in that context that glue is going for a relative decline because it hasn't because kardashian is his biggest game by far and that game is now mature it's every year old so people are starting to kind of churn out that game still making a lot of money off it but not as much as it was a year ago um so really with glue now we're waiting to see until the end of the year really to see when the first new celebrity game launches which will be uh katy perry and they're expecting that

end of 2015 perhaps to start 2016 but until that time kind of glues it is now in this period of it has a bunch of games they're doing okay but just not doing as well as they were doing at previous times as a year ago or six months ago or even three months ago so that's the uh that's the state play with glue the moment um in three months time we'll see how it's getting on again i guess and we'll be talking about it then okay come back and see what we're talking about tomorrow see you then you

Summary

Glu Mobile experienced a challenging second quarter in 2015, characterized by a 19 percent decline in revenue to 56.2 million dollars compared to the previous quarter. The company transitioned from a 1.1 million dollar profit to a 5.5 million dollar loss during this period. This downturn is primarily attributed to the maturation of the Kim Kardashian: Hollywood title, which launched over a year prior and currently accounts for approximately one-third of the company’s total sales. As the game’s user base experiences churn, the company has entered a period of relative decline following the peak performance levels seen during the title's initial release.

Despite these operational losses, the company maintains a strong financial position with 190 million dollars in cash reserves. This liquidity is largely bolstered by a strategic investment from Tencent, which provided approximately 120 million dollars in capital. This influx of cash allows the company to remain in an aggressive investment phase, focusing on securing new celebrity licensing deals to diversify its portfolio.

The company is currently in a transitional period as it awaits the launch of upcoming celebrity-branded titles, including games featuring Katy Perry and Britney Spears. These releases are anticipated to arrive between late 2015 and early 2016, serving as the primary catalyst for potential growth. Until these new titles debut, the company continues to rely on its existing library of games, which remain functional but are unable to replicate the record-breaking revenue peaks achieved during the height of the Kim Kardashian franchise.