Glu Mobile Inc. Q3 2016 Earnings Call - Seeking Alpha...Jan 09, 2017 · Glu Mobile Q3 2016 Earnings © Glu Mobile Inc. – Proprietary $67 $83 $109 $113 $242 $242 2010 2011 2012

Glu Mobile Q3 2016 Earnings © Glu Mobile Inc. – Proprietary

Glu Mobile Inc.

Q3 2016 Earnings Call

November 3, 2016

Page 1


Safe Harbor Statement

Page 2

This presentation contains "forward-looking" statements including: that we intend to focus on “winner takes all” “blue ocean genres”, and our four

game labels are ones where we believe we can be the best in the world in 2016/2017; that we are minimally exposed to increases in CPI; that

strong social features in a game will lead to long tail revenues; Glu intends to prioritize making its genre-leading games into evergreen games;

Glu intends to focus on retaining and monetizing elder players; Glu has multiple growth opportunities through virtual and augmented reality, quad

screen, mobile ad spending and international expansion; the planned evolution of Glu’s business, including our intention to have our games

function as platforms; our goal for catalog Bookings to cover fixed operating expenses and for new launches to account for less than 25% of

Bookings in a given year; our expectation regarding Crowdstar’s 2016 bookings and EBITDA; the expected launch date for Crowdstar’s Design

Home; the expected synergies we expect to realize from the Crowdstar acquisition, including increasing their ad revenues and decreasing their

user acquisition spending; the expected launch dates of games featuring celebrities we have signed to long-term partnerships; that we believe we

have a strong pipeline of games featuring celebrities that will be released in 2016 through 2018; our expected title release slate for 2016; the

expected contribution margin flow through of our Bookings; and our Q4-2016 and full year 2016 guidance including Crowdstar. These forward-

looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-

looking statements. Investors should consider important risk factors, which include: Glu may be unable to successfully integrate Crowdstar and its

employees and achieve expected synergies, Glu may have difficulty retaining key Crowdstar employees; consumer demand for smartphones,

tablets and next-generation platforms does not grow as significantly as we anticipate or that we will be unable to capitalize on any such growth;

the risk that we do not realize a sufficient return on our investment with respect to our efforts to develop free-to-play games for smartphones and

tablets; the risk that we do not maintain our good relationships with Apple and Google; the risk that Glu does not realize the anticipated strategic

benefits from its celebrity partnerships and strategic investments; the risk that our development expenses are greater than we anticipate or that

we experience product delays; the risk that our recently and newly launched games are less popular than anticipated; the risk that our newly

released games will be of a quality less than desired by reviewers and consumers; the risk that the mobile games market, particularly with respect

to social, free-to-play gaming, is smaller than anticipated; risks related to the restatement of certain of our historical financial statements and other

risks detailed under the caption "Risk Factors" in our Form 10-Q filed with the Securities and Exchange Commission on August 9, 2016 and our

other SEC filings. You can locate these reports through our website at http://www.glu.com/investors .

These "forward-looking" statements are based on estimates and information available to us on November 3, 2016 and we are under no obligation,

and expressly disclaim any obligation, to update or alter our forward-looking statements whether as a result of new information, future events or

otherwise.

http://www.glu.com/investors


Use of Non-GAAP Financial Measures

Page 3

Glu uses in this presentation certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be

considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-

GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with

Glu's results of operations as determined in accordance with GAAP. The non-GAAP financial measures used by Glu include Bookings, Adjusted gross profit (as

previously defined) (2), Adjusted gross margin (as previously defined) (1), Adjusted operating expenses and Adjusted EBITDA (as previously defined) (3). These non-GAAP

financial measures exclude the following items from Glu's unaudited consolidated statements of operations:

• Change in deferred revenue and deferred cost of revenue;

• Amortization and impairment of intangible assets;

• Non-cash warrant expense;

• Stock-based compensation expense;

• Restructuring charges;

• Transitional costs;

• Litigation proceeds and costs;

• Change in fair value of strategic investments;

• Release of tax liabilities and valuation allowance; and

• Foreign currency exchange gains and losses primarily related to the revaluation of assets and liabilities.

Bookings do not reflect the deferral of certain game revenue that Glu recognizes over the estimated useful lives of paying users of Glu’s games and excludes changes in

deferred revenue and litigation settlement proceeds.

In addition, Glu has included in this presentation “Adjusted EBITDA (as previously defined)” figures which are used to evaluate Glu’s operating performance.

Glu believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental

information regarding Glu's performance by excluding certain items that may not be indicative of Glu's core business, operating results or future outlook. Glu's

management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing Glu's operating results, as well as when

planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of Glu's performance to prior periods.

For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please refer to the tables at the end of this

presentation.

(1) See Appendix

(2) See Appendix

(3) See Appendix

Glu Mobile Q3 2016 Earnings © Glu Mobile Inc. – Proprietary Page 4

Executive Summary



Glu Management Team: Nick Earl Promoted to CEO

Chris Akhavan Chief Revenue Officer

Eric R. Ludwig COO & CFO

Niccolo de Masi Executive Chairman

Page 6

Tim Wilson Chief Technology Officer

Nick Earl President & CEO*

*Nick Earl promotion to President

& CEO effective 11/10/2016


Diversified Studio Infrastructure

Page 7

• Game studios:

San Francisco, CA

San Mateo, CA

Long Beach, CA

Bellevue, WA

Portland, OR

Toronto, Canada

Moscow, Russia

• Support offices:

Beijing, China

Hyderabad, India

London, UK

Tokyo, Japan


Glu’s 4 Game Labels

Page 8

Label Franchises

Action

Celebrity

Sports & Racing

Simulation

• Focus on ‘winner-

takes-all’ ‘blue-

ocean’ genres

• These represent

categories where we

believe we can be

the best in the world

in 2016/2017

Nicki Minaj, Taylor Swift

Future simulation games


17%

16%

13%

12%

9%

7% 5%3%

18%

YTD 2016: Bookings Delivery from a Broad Portfolio

Page 9

Kendall and Kylie $14.1M

Kim Kardashian: Hollywood $26.2M

Deer Hunter 2016 $10.4M Gordon Ramsay DASH $8.5M

Cooking Dash 2016 $25.9M

Tap Sports Baseball 2016 $20.5M

Other Catalog $27.8M

Racing Rivals $18.5M

Deer Hunter 2014 $4.4M


Bookings Diversity: Ad Bookings Hedge Against CPI Increases

Page 10

• We believe Glu has one of the leading % bookings contributions from

ads in the industry

• Minimally exposed to increases in CPI

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions)

Ad & Other Bookings Marketing Expense

14.7%

19.5%

14.9%

15.5%

14.8%

17.8% 16.8%

20.7%

15.7%

18.0% 18.3%

15.5%

15.6%

15.3%

12.6%

15.5%

17.6% 16.6%

13.8%

18.5%

17.0%14.6%

0%

5%

10%

15%

20%

25%

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

Ad & Other Bookings as % of Total Bookings Marketing as % of Total Bookings



Growth Landscape

Page 12


Typical

mobile

game

Strong Social & Elder Game = Long Tail Revenues

Peak at launch, then

declining curve

Flat to increasing curve, peak

bookings 16 months post launch

Page 13

VS. Launch Date 18+ Months From Launch

18+ Months From Launch Launch Date


Our Genre Leaders

85 titles shipped over past 6.5 years

Prioritize Making into Evergreen Games

Page 14


Evergreen Games

1. Grow year on year

2. System/mode updates

3. Community does much of the work

Focus on retaining & monetizing elder players

Page 15


Bookings Downloads

Page 16

Tap Sports Baseball Franchise

*Downloads and Bookings represent actual results for the first 150 days since global launch


ABPDAU ABPD

Page 17

Monetization Improvements

Average Bookings per DAU (“ABPDAU”) is computed as our total Bookings for the applicable title during the first 110 days from launch, divided by 110, divided by the DAU for the title during the

period.

Average Bookings per Download (“ABPD”) is computed as our total Bookings for the applicable title during the first 110 days from launch, divided by 110, divided by, the number of downloads for the

title during the period.


Multiple Long-Term Growth Opportunities

$ $ $


$67 $83 $109 $113

$242 $242

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Glu Evolution

1. Ramping smartphone business

2. Running off feature-phone

operations

1. New launches ~50% of Bookings

2. Forward investing for topline growth

3. Fixed OPEX > catalog Bookings

1. Games-as-Platforms

2. Catalog bookings covers fixed

OPEX

3. New launches <25% of

Bookings

Page 19

Bo

okin

gs (

$m

)

The goal of Bookings growth in 2020 represents a potential outcome if our business strategies are successful. This potential outcome should not be treated as a forecast, projection or financial guidance. We cannot assure you that we will achieve any particular

growth rate and we may not grow at all. Our performance is subject to many material risks and uncertainties that could cause our actual performance to fall short of this example scenario, including the risks discussed in our Quarterly Report on Form 10-Q filed with

the SEC on August 9, 2016 and our other SEC filings..

Fixed OPEX

Catalog Bookings


Crowdstar Acquisition


Glu’s History of Accretive M&A

• Aug ’11: Highly profitable, DH14 and Dino Hunter developer

• Aug ’11: Stardom developer, including Kim Kardashian: Hollywood

• Mar ’12: Paid $5m for brand; saved approx. 7X in royalties in 4 yrs

• Aug ’12: 90 days cash on cash return; core tech for GaaS platform

• Nov ’13: Acqui-hire for $250K; Tap Sports #1 Glu title for 2016

• May’14: $15m for developer of Cooking Dash and Gordon Ramsay

• Aug’14: Racing Rivals developer

Page 21


Crowdstar Introduction

Page 22

• Leading Developer in fashion space

• 88 employees based in Burlingame, CA. Good cultural fit, local team, high

quality talent, IP and engine

• 2016 Bookings of $48m expected; $(1) million EBITDA loss

• Covet Fashion revenue has grown last 3 years in a row; platform-like

properties and revenue quality

• Covet Fashion: #80 Top Grossing (USA, iPhone, All Apps, 11/2/2016)

• Design Home launching early 2017; built off Covet engine with platform

capabilities targeting interior design/home market

• Design Home performing well in beta; currently #54 top grossing in Canada (Canada, iPhone, All Apps,

11/2/2016)


Design Home in Beta

Page 23

Strong Beta Revenue in Canada Downloads in Canada


Deal Structure & Consideration

Page 24

• Acquired controlling interest in all-cash transaction

valuing Crowdstar at approximately $45.5 million

• Closed on November 2, 2016

• Represents 0.9X multiple on projected 2016 bookings


Crowdstar Rationale and Potential Synergies

Page 25

• Platform like product with evergreen revenue

• Expected Synergies by 2018:

• We believe we can increase Ad revenues from 8% (Crowdstar actuals) to 16% (Glu’s actuals) by

leveraging Glu ad network contract terms and expanded use of video ads

• We believe we can decrease UA spend from 35% of gross revenue (Crowdstar actuals) to 15-

20% (Glu’s actuals) by leveraging Glu’s User Tracking System for campaign level ROI

performance


User Engagement

Page 26


Consumer Interest

105.6

60.2

107.7

89.4

72.6

87.6

78.882.2

70.5

56.459.6

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions) Installs

711.9772.1

879.8969.2

1,041.81,129.5

1,208.21,290.4

1,360.91,417.3

1,476.9

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions) Cumulative Installs


DAU and MAU Trends

Aggregate DAU and MAU for each period presented represents the aggregate metric for the last month of the period. An individual who plays two different games in the same month is

counted as two active users for that month when we aggregate DAU and MAU across games. In addition, an individual who plays the same game on two different devices during the same

month (e.g., an iPhone and an iPad) is also counted as two active users for each such month when we average or aggregate DAU and MAU over time. Our methodology for calculating DAU

and MAU may differ from the methodology used by other companies to calculate similar metrics.

7.0

5.3

7.2 7.2

6.0 6.1

5.55.1 4.9

4.1

3.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions) DAU64.5

51.9

60.362.6

54.6

59.6

53.049.4

42.4

35.8

29.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions) MAU


ABPDAU and ABPMAU Trends

Average Bookings per DAU (“ABPDAU”) is computed as our total Bookings in a given period, divided by the number of days in that period, divided by, the DAU during the period.

Average Bookings per MAU (“ABPMAU”) is computed as our total Bookings in a given period, divided by the number of months in that period, divided by, the MAU during the period.

Aggregate DAU and MAU for each period presented represents the aggregate metric for the last month of the period.

$0.07 $0.07

$0.13

$0.11 $0.12

$0.10

$0.13 $0.12 $0.12

$0.14

$0.16

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

$0.16

$0.18

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

ABPDAU

$0.24$0.23

$0.46

$0.41$0.38

$0.32

$0.41 $0.39$0.42

$0.47

$0.58

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

ABPMAU


• 1.5 Billion* total social

followers inked

• Long-term partnerships

• Strong pipeline of games

to be released in 2016

through 2018

Social Power CELEBRITY REACH*

LAUNCH OR

EXPECTED LAUNCH

Kim Kardashian West 154m June 24, 2014

Jason Statham 62m October 22, 2015

Katy Perry 235m December 17, 2015

Kylie & Kendall Jenner 196m February 19, 2016

Britney Spears 102m May 19, 2016

Gordon Ramsay 13m June 28, 2016

Nicki Minaj 136m Soft Launch, Fall 2016

Taylor Swift 261m 2017

Signed but not announced 330m+ 2017-2018

*Aggregate # of followers across Facebook + Twitter + Instagram + Vevo followers as of November 1, 2016. There is overlap of these social audiences between channels and celebrities.

Page 30


Financial Overview

Page 31


Q316 Financial Summary

Q316

Guidance

(in millions, except EPS) Actuals* Low High

Bookings 51.3$ 50.0$ 52.0$

Adjusted Gross Profit (as previously defined) (2)

2.3 31.1 32.3

Adjusted Gross Margin (as previously defined) (1)

4.5% 62.1% 62.1%

Adjusted Operating Expenses 34.1 35.7 36.4

Depreciation 0.8 0.6 0.6

Adjusted EBITDA (as previously defined) (3)

(31.0)$ (4.0)$ (3.5)$

Basic & Diluted:

Earnings/(Loss) per Share (0.24)$ (0.04)$ (0.03)$

Basic & Diluted Shares 133.1 132.9 132.9 *Q316 results include $29.8 million of prepaid royalty impairments

(1) See Appendix

(2) See Appendix

(3) See Appendix


*Q316 results include $29.8 million of prepaid royalty impairments

(1) See Appendix

(2) See Appendix

(3) See Appendix

Page 33

Q316 Non-GAAP Results

($ in millions) Q316* Q216 Q/Q Q315 Y/Y

Bookings $ 51.3 $ 50.9 1% $ 64.4 (20%)

Adjusted Gross Profit (as previously defined) (2) 2.3 31.9 (93%) 38.1 (94%)

Adjusted Gross Margin (as previously defined) (1) 4.5% 62.7% -5820 bp 59.1% -5460 bp

Adjusted Operating Expense 34.1 35.8 (5%) 30.4 12%

Adjusted EBITDA (as previously defined) (3) $ (31.0) $ (3.2) (869%) $ 8.5 (1115%)


Bookings and Adjusted EBITDA

$47.0

$35.0

$83.6

$76.2

$62.4$57.5

$64.4

$57.9$54.0

$50.9 $51.3

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

Bookings(in Millions)

$6.5

($0.9)

$15.4 $14.1

$3.9 $1.7

$8.5

$2.8

($3.8) ($3.2)

($31.0)($35.0)

($25.0)

($15.0)

($5.0)

$5.0

$15.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316


(in Millions)

* *

*Q316 Adjusted EBITDA includes $29.8 million of prepaid royalty impairments

(3) See Appendix


% of Bookings

9% 12% 6% 8% 10% 9% 4% 8% 11% 10% 10%

20%22%

18% 16%20% 22%

19%18%

23% 21% 19%

28%

39%

17% 20%

28% 30%

24%33%

35% 39% 37%

25%

23%

26% 25%

26% 25%

25%

24%

25% 25%25%

2%

2%

58%

2%

4%

13% 11%

10% 10%

11%

8%

10% 10%

10%

3%

4%

2% 2%

2%3%

3%

4%

3% 3%

2%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

Hosting and other costs

Royalties

Royalty Impairments

Platform commissions

R&D Opex

S&M Opex

G&A Opex


Bookings by Geography

17.2 14.7 13.0 11.6 10.5 9.6

19.6 24.5

5.6 5.5 7.1 7.0 7.8 6.6

7.3

10.4 6.4

5.9 6.3 6.0 6.1 5.6

8.0

9.7

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114

NA APAC ROW

Q3 2016

24.120.0

56.950.7

44.5 41.849.6

44.1 41.4 41.5 40.6

12.6

6.8

9.8

9.8

8.57.6

6.4

6.25.1 4.1 5.010.3

8.2

16.9

15.7

9.48.1

8.4

7.67.5 5.3 5.7

$47.0

$35.0

$83.6

$76.2

$62.4 $57.5

$64.4

$57.9 $54.0

$50.9 $51.3

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions)

NA APAC ROW

79%

10%

11%


Bookings Mix

59%56%

67%62%

60% 61% 61%60% 64% 64% 61%

38%

38%

31%

36%

38%38%

38%39% 35%

34% 37%

3%

6%

2%

2%

2%1%

1%

1%1%

2% 2%$47.0

$35.0

$83.6

$76.2

$62.4 $57.5

$64.4

$57.9 $54.0

$50.9 $51.3

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions) Bookings by Platform

iOS Android All Other

83%

76%

85%85%

85%82%

83%79% 84% 82% 83%

15%

20%

15%

15%

15%18%

17%

21% 16%18% 17%2%

4%

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

(in Millions) Bookings by Category

In-App Purchases Ads Premium/All Other


Q214, $6.7M, 13%

Q314, $6.5M, 13%

Q414, $1.8M, 3%

Q215, $8.6M, 17%

Q315, $2.9M, 6%

Q116, $11.0M, 21%

Q216, $8.6M, 17%

Q316, $0.7M, 1%

Other, $4.4M, 9%

Page 38

Bookings by Vintage $51.3M Total Bookings in Q316

Cooking Dash 2016 $8.0M



Racing Rivals

$5.8M

Gordon Ramsay DASH $8.3M Tap Sports Baseball 2016 $9.1M

Kendall and Kylie $1.9M

Contract Killer: Sniper $1.2M

Kim Kardashian: Hollywood $6.7M

Rival Fire $0.6M


Strong Balance Sheet

($ in millions) Q316 Q216 Q315

Cash and cash equivalents 147.5$ 158.0$ 182.3$

Accounts receivable, net 14.2 14.3 26.0

Prepaid expenses, royalties and other current assets 28.9 36.6 35.4

Other assets 42.4 67.5 51.7

Intangible assets & goodwill 99.0 106.0 108.0

Total Assets 332.0$ 382.4$ 403.4$

Accounts payable and accrued liabilities 12.3 10.8 12.4

Accrued expenses, royalties and other liabilities 40.3 52.1 50.3

Deferred revenue 32.4 33.2 34.1

Common stock/Paid in capital 568.4 564.7 554.9

Accumulated deficit & other comprehensive income (321.4) (278.4) (248.3)

Total Liabilities and Stockholders' Equity 332.0$ 382.4$ 403.4$


Guidance

Page 40


6 Launches in 2016

January 2016 December 2016

*

*Soft launch expected


Strong Contribution Margin Flow Through*

% of Bookings Original IP Low High

Bookings 100.0% 100.0% 100.0%

Platform Fees 24.5% 24.5% 24.5%

Royalties 0.0% 8.0% 24.1%

Adjusted Gross Margin (as previously defined) (1) 75.5% 67.4% 51.4%

User Acquisition 15.9% 15.9% 15.9%

Contribution Margin of Incremental $1.00 of

Bookings 59.6% 51.5% 35.5%

Branded IP Royalty

*All figures presented on an Adjusted basis.

(1) See Appendix


2016 Full Year Non-GAAP Guidance - Glu + Crowdstar

Guidance ($ in millions) Q116 Q216 Q316 Q416 2016

Total Bookings (Low) $54.0 $50.9 $51.3 $46.0 $202.2

Total Bookings (High) $54.0 $50.9 $51.3 $48.0 $204.2


2016 Full Year Non-GAAP Guidance - Glu + Crowdstar

Glu Standalone Guidance:




Crowdstar Guidance:


Total Bookings (Low) $8.0 $8.0

Total Bookings (High) $8.0 $8.0

Glu + Crowdstar Guidance:





Q416 Non-GAAP Guidance – Glu + Crowdstar

($ in millions, except EPS) Q316*

Act

Q416

Guidance

Q416

GuidanceLow High

Bookings $51.3 $46.0 $48.0


Adjusted Operating Expense 34.1 40.0 40.3

Depreciation Addback 0.8 0.8 0.8

Basic & Diluted Shares (millions) 133.1 134.0 134.0

(1) See Appendix


2016 Full Year Non-GAAP Guidance – Glu + Crowdstar

($ in millions, except EPS) 2015

ActLow High

Bookings $242.2 $202.2 $204.2


Adjusted Operating Expense 135.3 147.3 147.6

Depreciation Addback 2.9 2.9 2.9

Basic Shares (millions) 118.8 131.9 131.9

Diluted Shares (millions) 122.8 131.9 131.9

Cash and ST Investments Balance $180.5 $80.0

2016 Guidance

(1) See Appendix


Key Statistics

Stock Price $1.99

52 Week High $4.45

52 Week Low $1.98

Shares Outstanding 133.5

Avg. Daily Volume (last 90 days) 1,641,761

Market Capitalization $265.6

Debt $0

Cash $146.7

Enterprise Value $118.9

Shares Outstanding is as of October 28, 2016

Cash balance is as of September 30, 2016

Average Daily Volume is calculated using the last 90 calendar days

Market Statistics (as of October 28, 2016)

(in millions except per share and volume data)


Investment Highlights

• Diversified portfolio of franchises

• Long-tail social and evergreen games provide visibility

• Strengthened studio and technology leadership

• Strong balance sheet with no debt


Non-GAAP Reconciliations

Page 49


GAAP to Adjusted Results Reconciliation

(2) See Appendix


Adjusted EBITDA (as previously defined) (3) Reconciliation

(3) See Appendix


Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual

Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316

Total Bookings (in millions) $47.0 $35.0 $83.6 $76.2 $62.4 $57.5 $64.4 $57.9 $54.0 $50.9 $51.3

Total Bookings Growth Q/Q 10% (25%) 138% (9%) (18%) (8%) 12% (10%) (7%) (6%) 1%

Total Bookings Growth Y/Y 90% 51% 270% 78% 33% 64% (23%) (24%) (14%) (11%) (20%)

Original IP % of Total Bookings 91% 93% 37% 41% 43% 41% 38% 50% 43% 37% 33%

Adjusted Operating Expenses (in millions) $26.7 $25.6 $35.0 $33.1 $35.9 $35.0 $30.4 $34.1 $37.4 $35.8 $34.1

Marketing Expense (in millions) 7.3 5.5 12.8 9.6 9.7 10.1 10.7 8.0 10.0 8.6 7.5

Marketing as % of Total Bookings 15% 16% 15% 13% 16% 18% 17% 14% 19% 17% 15%


(in millions) 6.5 (0.9) 15.4 14.1 3.9 1.7 8.5 2.8 (3.8) (3.2) (31.0)

Headcount** (at quarter-end) 547 562 630 653 695 732 770 759 738 664 667

Daily Active Users (DAU)* (in millions) 7.0 5.3 7.2 7.2 6.0 6.1 5.5 5.1 4.9 4.1 3.5

Monthly Active Users (MAU)* (in millions) 64.5 51.9 60.3 62.6 54.6 59.6 53.0 49.4 42.4 35.8 29.6

Installs (in millions) 105.6 60.2 107.7 89.4 72.6 87.6 78.8 82.2 70.5 56.4 59.6

Cumulative Installs (in millions) 711.9 772.1 879.8 969.2 1,041.8 1,129.5 1,208.2 1,290.4 1,360.9 1,417.3 1,476.9

In-App Purchase Billable Transactions (in millions)*** 3.3 2.3 7.8 6.9 5.3 4.8 6.0 4.9 5.0 4.4 4.6

Average Bookings per Billable Transaction*** $11.79 $11.84 $9.14 $9.31 $10.06 $9.78 $8.91 $9.44 $9.15 $9.61 $9.08

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Key Operating Metrics

*DAU & MAU reflects the DAU & MAU figures for the last month of the quarter

**FTE only, excludes contractors, temporary employees and consultants

***Q314 in-app purchase billable transactions and average booking per billable transaction has been revised to include the impact of Cie Games activity after its acquisition on August 20, 2014; Q115 and Q215 in-app

purchase billable transactions and average bookings per billable transaction have been revised to reflect corrected data

(3) See Appendix


Appendix


Non-GAAP (as previously defined) and Non-GAAP (redefined) Financial Measures

Page 54

(1) We have provided Adjusted gross margin (as previously defined) in this presentation. Adjusted gross margin (as previously defined) excludes the impact from revenue

and cost of revenue deferrals accounting treatment on our products. This is the last quarter we will report Adjusted gross margin (as previously defined) and going

forward, we will only be providing GAAP and Adjusted gross margin (redefined) results which includes the impact from revenue and cost of revenue deferrals accounting

treatment on our products .

(2) We have provided Adjusted gross profit (as previously defined) in this presentation. Adjusted gross profit (as previously defined) excludes the impact from revenue

and cost of revenue deferrals accounting treatment on our products. This is the last quarter we will report Adjusted gross profit (as previously defined) and going forward,

we will only be providing GAAP and Adjusted gross profit (redefined) results which includes the impact from revenue and cost of revenue deferrals accounting treatment

on our products .

(3) We have provided Adjusted EBITDA (as previously defined) in this presentation. Adjusted EBITDA (as previously defined) excludes the impact from revenue and cost

of revenue deferrals accounting treatment on our products. This is the last quarter we will report Adjusted EBITDA (as previously defined) and going forward, we will only

be providing GAAP net Income/(loss) and Adjusted EBITDA (redefined) results which includes the impact from revenue and cost of revenue deferrals accounting

treatment on our products.

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