Glu cuts 12% of workforce, delays release of planned games
Glu Mobile (NASDAQ:GLUU) said it would cut 12 percent of its workforce, or around 67 employees. The actions will leave the company with around 564 employees. However, Glu said the job cuts are part of an effort to centralize and streamline the production of games, and the company continues to hire new employees in specific functions. As a result, Glu said it expects to end 2013 with 580 employees.
Separately, Glu said it plans to delay the release of two games, Tons of Guns and Mobsters and Gangsters, from late in the second quarter to late in the third quarter. Glu said it plans to release only one new game in the second quarter, Zombies Ate My Friends, and that it will release five Glu games total this year.
"We believe concentrating resources on fewer titles, with a greater centralized support infrastructure, will accelerate revenue growth in Q4 2013 and beyond," said Niccolo de Masi, Glu's CEO, during the company's first quarter earnings conference call.
"While our second quarter guidance reflects a light title launch schedule, we remain in position to benefit during the second half of the year from new title launches, increasing monetization trends and progress from Glu Publishing," said Eric R. Ludwig, Glu's CFO. "We remain confident in our ability to end 2013 with approximately $14 million in cash and without the need to raise additional capital or incur debt."
Glu executives spent a large portion of the company's quarterly earnings call discussing Glu's new "games as a service" business strategy. The strategy essentially is geared toward lengthening the lifespan of Glu's games by encouraging users to continue playing the titles through social connections, daily contests and other mechanisms. Glu is working to develop centralized servers and business strategies to support the "games as a service" strategy.
"We anticipate further monetization and retention traction as we continue to evolve our studio and begin to launch true games-as-a-service," explained de Masi.
Glu also pointed to progress with its new publishing business. Earlier this year, Glu rolled out a publishing division designed to help third-party developers port hit iOS games to Google's (NASDAQ:GOOG) Android and Microsoft's (NASDAQ:MSFT) Windows Phone. Glu executives said during the company's first quarter earnings call that the company has signed up a handful of companies as customers, including two of the leading MMOs from China, which will launch games through Glu's publishing business in the second half of the third quarter. Glu said it expects to launch a total of six games through its publishing business by the end of the year.
Glu executives also discussed the company's efforts in real-money gambling. The company has partnered with Probability for real-money gambling games in the United Kingdom, and Glu executives promised the company would continue to work to bring additional titles to market in the United Kingdom and, eventually, into the United States. However, the company said it doesn't expect "material" revenues for the efforts this year.
As for Glu's first quarter financials, the company reported revenue of $19.1 million in the first quarter of 2013, down slightly from the $21.5 million it earned in the year-ago quarter. Glue's net loss was $5.5 million in the quarter, a slight improvement from the $6.8 million loss in the year-ago quarter. Interestingly, the company said 63 percent of its smartphone revenues came from Apple's App Store, and 29 percent came from Google Play.
As for the second quarter, Glu said it expects non-GAAP revenues of between $16.5 million and $17.5 million and a non-GAAP net loss of between $4.2 million and $5.1 million.
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