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Glu Mobile Q1 earnings preview: What’s on the cards

Glu Mobile (NASDAQ: GLUU), which hit an 11-month high last month, is scheduled to report first-quarter 2019 results on Monday, May 6, after the closing bell. The gaming company is expected to post earnings of 5 cents per share on revenues on $90.16 million, up over 10% year-over-year, riding on the strength of its growth games.

During the last-reported quarter, the mobile game publisher reported a loss of 1 cent per share, even as analysts were expecting it to report its first quarterly profit in three years. Disappointed investors sent the shares plunging 10%.

Glu Mobile Q4 earnings - daily active users - monthly active users

Despite the bad results, the stock went on to hit an 11-year-high halfway into the current quarter. But this rally wasn’t exactly driven by Glu’s performance, rather it reflected the investor confidence in the lucrative mobile gaming market as a whole.

The global gaming market is estimated to exceed $180 billion in revenues within the next two years, up 30.6% from 2018. Mobile games, which could contribute more than half of the game revenues, are projected to grow from $70.3 billion this year to $106.4 billion by 2021. Being a strong player in the market, Glu is set to benefit from this growth.

Slipping user engagement is a lacuna that Glu needs to bridge immediately. In the fourth quarter, daily active users declined 16%, while monthly active users dipped 26%. This decline could be attributed to the cancellation or delay of various titles.

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For the first quarter of 2019, Glu expects bookings to be in the range of $88 million to $90 million. For full-year 2019, the San Francisco, California-based company upgraded its outlook, reflecting the anticipated booking contributions from two games that are currently in beta. The bookings for the year are expected to be in the range of $435 million to $445 million.

A beta version of the next-generation Deer Hunter franchise is set to be launched later this year. An earlier version of the game was a highly successful title for Glu, garnering over 25 million downloads. Glu would be looking to repeat the success.

 

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