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As the third quarter of 2020 recently wrapped up, organizations began releasing their results, and current Glu Mobile shareholders ought to be ecstatic about what’s to come, and those thinking about buying in should strongly consider doing so.
Before diving into the numbers, for those that do not know about Glu Mobile , they are an American publisher and developer of mobile games, featuring Design Home, Tap Sports Baseball, Covet Fashion, Deer Hunter, and countless others. Founded in 2001, Glu is based out of San Francisco, with additional offices located in Foster City (California), Toronto (Ontario, Canada), and Hyderabad (India). Currently led by CEO Nick Earl, Glu is looking to continue to build on this strong momentum and finish off 2020 strong heading into the new year that could be a big one for them.
The Results
- Revenue reached a record high US$158.50 million, beating the estimate of US$136.30 million & results in a year-over-year growth of 48%
- Net income of US$13.40 million, compared to loss of US$5.1 million previous year Q3
- US$147.30 million in bookings, year-over-year growth of 22%
- Daily active users (DAUs) were 2.9 million
- Operating expenses came in at US$36.80 million lower than the expected US$39 million
- Average bookings per monthly active user (ABPMAU) reached US$3.50 compared to last year at US$2.15, the highest figure in the past 6 quarters for Glu
Future Outlook
While this quarters results are exciting for current shareholders, what these numbers really mean is even more intriguing, including for future shareholders.
As seen above, Glu Mobile has a strong track record of their bookings resulting in actual revenue. With their recent performance, Glu has increased their full-year bookings estimate to a range of US$555.30-US$560.30 million, over US$100 million more than the original bookings estimate between US$423-US$433 million. Based on the historical data of converting their bookings into revenues, it is safe to expect Glu to hit US$500 million in revenues and even realistically exceed that.
Looking ahead to 2021, the new forecast has bookings set to hit US$600 million, and that could even be on the lower end. During the latest earnings call, it was announced by management that the 2021 bookings forecast does not feature any of the new games that Glu is planning to release in the new year. So, taking this into account US$600 million is definitely a figure within reach and further than that, a surpassable figure as Glu continues to reach new heights along with the gaming industry as a whole. Glu is also now expecting 420 basis points in its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a 220 point growth. This further solidifies the trajectory that Glu Mobile is on; delivering improved earnings, which could lead to more upside for their stock.
Recently, Newzoo released their updated Global Games Market Report for 2020, which included expecting the market to reach US$174.9 billion in revenue, and the breakdown of that revenue into the different segments of the industry. Leading the way in revenue is the mobile gaming segment, accounting for 49% of the market at US$86.3 billion, a 25.6% growth year-over-year. As Glu Mobile continues to grow its revenues at a higher rate than the industry, they are as strong of a bet as any to take advantage of this continued growth as a strictly mobile specialist organization.
Overall, Glu is a good bet for investors based on everything above. They have been growing their earnings now, and expecting more in the future while taking advantage of the largest segment in a rapidly growing industry. While they don’t instantly jump off the page as a leader in the gaming industry, their overall package looks like it is headed for explosive growth, and seems poised to take that next step in the mobile gaming landscape.
