Glu Mobile Inc
Q3 2020 Earnings Call Transcript

Published: 6 Nov 2020

[Operator Good afternoon ladies and gentlemen, and welcome to the Q3 2020 Glu Mobile Earnings Conference Call. At this time, all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.I would now like to turn the conference over to your host, Mr. Harman Singh, VP of Finance and Investor Relation.Harman Singh Thank you, operator. Good afternoon, everyone, and thank you for joining us on Glu Mobile's third quarter 2020 earnings conference call. On the call today are Nick Earl, President and Chief Executive Officer; and Eric Ludwig, COO and Chief Financial Officer.During this call, we will be making forward-looking statements regarding future events and the future financial performance of the company. Any forward-looking statements that we make today are based on assumptions that the company believes to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events. We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements in the press release and during this conference call. These risk factors are described more fully in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q. During this call, we will present both GAAP and non-GAAP financial measures. The non-GAAP financial measures are not intended to be considered in isolation from, a substitute for, or superior to GAAP results, and we encourage investors to consider all measures before making an investment decision. For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to the supplemental presentation accompanying today's earnings call that can be accessed via our Investor website, www.glu.com/investors. As a reminder, consistent with our financial presentation and for all of the information aside from bookings, whereas otherwise stated below, we will discuss results on a GAAP basis and refer you to changes in deferred revenue, the deferred cost of revenue and the non-GAAP operating expense total in our financial tables. This data will provide a GAAP to non-GAAP reconciliation of the quarter's financial results based on the same methodology we've used in prior quarters. We are also providing a supplementary Excel file on our IR website to more easily aid in this reconciliation. Both the PowerPoint and Excel file are now accessible on the website. We encourage you to follow along with the slides during this conference call.And, with that, I would like to turn the call over to Nick.Nick Earl Thanks, Harman. Hello everyone and thank you for joining. On today's call, I will cover highlights from the third quarter and give an update on our development pipeline and growth initiatives. Eric will then provide details on our financial results revised guidance for 2020 and our preliminary outlook for next year.We've all had a very strong second quarter with better than expected top and bottom line results in the third quarter. Bookings grew 22% year over year to $147.3 million lead by continued high player engagement and increase monetization across our live titles. Our focused on driving margin expansion primarily through greater productivity in UA spending produce record adjusted EBITDA as booking stacked and our business scaled. We generated $45.7 million in free cash flow in the trailing 12 months and closed our Q3 with $318.1 million in cash to support our organic and inorganic growth strategies. We also delivered record quarterly revenue and net income on a GAAP basis in the quarter. We entered 2020 with bookings guidance of $428 million or 1% year over year growth. In this year's first nine months we've surpassed that with $435.8 million in bookings and today raise full guidance to $558.3 million at the midpoint representing 32% annual growth. The significant increase reflects a favorable operating environment, the successful launch of Disney Sorcerer's Arena, and continued strong player engagement in our live titles.We believe we are in the early stages of realizing the scale that we have spoken about as our bookings grow. We began the year expecting flat adjusted EBITDA year over year, and now we expect to produce almost twice that amount. We reorganized our UA function at the start of the year with new initiatives around people, process and technology to increase productivity. These initiatives are showing strong results as we are adding higher quality players and optimizing our UA spend. We believe the model for driving a significant flow through we produced this quarter is sustainable as we entered 2021 and beyond.Bookings from our three growth games grew 13% year over year. Design home is up 15% driven by the ongoing benefit of strong UA performance in the prior quarter. During the quarter we also re-launched our in game ecommerce store design home inspired, and we have seen early positive results. This is a high margin opportunity that we expect will leverage our large design home user base over time. Covet fashion was a real standout performer growing 30% led by a new cover collection subscription along with our hair accessory feature and a very strong fall launch. Tap sports baseball bookings were virtually flat year over year, our performance we're very pleased with given the shortened MLB season. We also saw another quarter of strong results from Kim Kardashian Hollywood, which is up 170% year over year, increasing our confidence this can become a growth game in 2021.We are excited about what we believe is a large growth opportunity for Crowdstar and Glu Sports our umbrella brands. First, we are leaning into the Crowdstar brand and its key pillars which include inspiring players in the realize by blending games and lifestyles, creating a female community with a sharp focus and understanding of women's passions and interests, and developing elevated game play that makes users feel enriched and inspired to a highest statics, quality and style. In addition to our current growth games under this umbrella brand we also have several other exciting developments to share. Under our Glu Sports brand, we are planning two new launches in 2021, Deer Hunter world and Tap Sports fishing, as well as an updated version of the MLB Tap Sports baseball. These games are highly focused on the action-packed sports and outdoor genres and draw a largely male audience that complements our Crowdstar brands.I'm pleased to share some exciting news about P3 one of our most anticipated games, the title for P3 will be table and taste. A game that will allow users to play and engage with food pairings, aesthetic and decor to create impressive dining experiences. Our Crowdstar Studios entering the food vertical and leveraging their covet fashion and design home success by applying their best of breed mechanics of the core loop and design structure. The game will feature authentic recipes and branded decor with the most realistic graphics that the Crowdstar team has ever created to build Glu's next potential growth game. We believe the addressable market in the food category is significantly larger than both the home decor and fashion categories and serves a broader and more diverse demographic.Table & Taste retention rates in closed out [ph] have been very encouraging more to come as we continue development towards the 2021 launch. We've also made swift progress in developing a hyper casual suite of games called Crowdstar moments that will help elevate the Crowdstar brand. These ad base games are designed to efficiently grow our user base and drive players into design home and covet fashion to high LTV games as well as table and taste to cross promotion. Given the potential upcoming changes in the UA ecosystem due to IDFA Crowdstar moments is positioned to allow us to expand our user base more efficiently while also diversifying our advertising business.For the two current Crowdstar growth games, and the upcoming launches of Table Taste, and Crowdstar moments we believe this umbrella brand will continue to drive our growth going forward.Looking at a Glu sports pipeline Deer Hunter world development is going very well. On the last earnings call, we've said we would launch the game in 2021. And I'm happy to say that we are on track for a second quarter release. The team is building out a more robust player versus player experience that is fully connected to the core loop. The title deep social and competitive features and event driven live ops will add more depth to the game. We continuously immense potential in this IP with its global appeal and high download history.Task Force fishing remains in beta and the team is focused on fine tuning the core mechanic while developing the new user flow and social and meta features. We look forward to updating you on these titles as we move into next year. Our growth strategy is structured around three strategic initiatives that we believe will drive long term growth and margin expansion. The first is to continue to grow and scale our three growth games through live operations and social events. Second, we have a robust roadmap in 2021 with titles that we believe have the potential to stack bookings and become growth games. We also are focused on acquiring assets that can benefit from our proven ability to use our infrastructure to create a winner. And third our UA and marketing initiatives are designed to drive efficiency and productivity going forward.We believe that these strategic priorities when combined with an executed on will help us scale the business and expand margins. On the acquisition front, we are actively evaluating opportunities that fit our target criteria. We have a strong record of acquiring quality assets over the years and utilizing our infrastructure to create growth games. The highlights of our acquisition history include taking the Glu sports studio from an aqua [ph] hire to a $100 million dollar a year franchise and Crowdstar from a small $50 million a year studio to a $280 million year franchise with lifetime bookings that are expected to break $1 billion by the end of 2020.We will continue to be highly discerning in pursuing opportunities that we believe will be financially accretive and we are well equipped in position with ample cash in our balance sheet to pursue a transformative acquisition.In summary, we had a great third quarter and upwardly revised our guidance for the fourth quarter and the full year 2020 to reflect the third quarters outperformance and are expected strong finish to the year. Looking out to 2021 we believe we are well positioned to continue to deliver solid top line growth driven by the continued strength of our growth games, the steady progress and contributions of our potential growth games and the exciting launches we have slated for the year. We also sharpened our focus on more efficient marketing spending that we believe will drive increased profitability and margin expansion.I would now like to turn it over to Eric and then we'll take your questions.Eric Ludwig Great. Thanks, Nick. Good afternoon to everyone on the call. I will review our strong third quarter financial results and then walk through our fourth quarter and full year 2020 financial guidance. While we plan on providing formal guidance for the full year 2021 in early February, I would provide some context on our preliminary outlook. Our third quarter results were significantly better than expected and position us for a record year in bookings and profitability, allowing us to beat and raise both bookings and EBITDA for the full year.GAAP revenue was $158.5 million, with net income of $13.4 million, both representing quarterly records. For the first nine months of 2020 revenue was up 34% as compared to the first nine months of 2019. Bookings grew 22% year over year to $147.3 million driven by strong player engagement and great live ops execution across all titles. For the first nine months of 2020 bookings was up 38% as compared to the first nine months of 2019 and our year to date bookings through September 30 is larger than 2019 full year results.As Nick mentioned are three growth games grew 13% year over year and contributed 71% of total bookings. Design home is up 15% to $52.1 million. Covet fashion grew 30% to $22.4 million and Tap Sports Baseball was essentially flat at $30 million, reflecting the shortened MLB baseball season. And looking at our potential growth games, Disney Sorcerer's Arena had bookings of $14.7 million, which puts its first two full quarters since going live in late March at total bookings of $36.8 million. Kim Kardashian Hollywood bookings reached $12.4 million a 171% year over year increase as a result of effective UA investment and player reengagement.Diner Dash Adventures, bookings were $9.4 million and as expected down year over year and given that the game was launched just prior to last year, third quarter. Royalty free Glu IP titles generated 60% of bookings; ad revenue was $14.9 million or 10% of total bookings, representing a 13% increase over last year. Our daily payer conversion in the third quarter of 2020 was a Glu record of 5.1%. This is up 50% from the third quarter of 2018. Our monetization over the same two-year period grew even faster, increasing 69% from $0.32 to $0.54 per user per day.Our monetization growth accelerated in the last 12 months as compared to the prior 12-month period. This growth and monetization reflects our continuing optimization of live operations, as well as adding systems and features to our games to increase player engagement. I would now like to touch on the pillars of our updated UA assessment strategy. We implemented an updated UA plan at the end of last year to drive productivity initiatives and efficiencies. We are now showing strong results in both our marginal flow through and our positive player retention rates as a result. We are efficiently adding higher quality players and better optimizing our UA spend. These productivity initiatives are centered around people, process and technology.On the people initiative, we reorganize our entire internal marketing team under new leadership and focus on horizontally building key brand verticals in our lifestyle and Glu Sports brands at the end of last year. We also fostered better coordination between our studios to enable tighter feedback loop within the Glu infrastructure. Additionally, we took a data led approach into our processes, improving user identification in our ad campaigns and focusing on high ROI opportunities to drive increase user retention. On the technology front we enhanced our proprietary capabilities and rebuilt key performance dashboards, enabling better decision making and more predictable growth rates on paid cohorts.This was a steady and positive build throughout the year, as we tested and implemented these initiatives while building our user base during the shelter in place period. These initiatives taken together have helped produce more successful campaigns that are generating a higher ROI, as well as allowing us to shift spend from underperforming campaigns to successful campaigns while they're going on. We believe the shift in our approach to UA spend will foster bottom line increases and margin improvement without compromising top line growth moving forward.Looking at the expenses for the third quarter of 2020, we spent $3.4 million less on UA and marketing as compared to our high-end guidance due to the positive UA efficiencies that I just spoke of. UA spend was $34.5 million or 23.4% of bookings compared to $40.2 million in last year, third quarter, and $57 million in this year's second quarter. We spent $2.3 million less on UA, non UA OpEx as compared to our high-end guidance due to discipline OpEx management.On a year over year basis operating expenses excluding UA and marketing were $36.8 million compared with $30.7 million in last year third quarter. Our adjusted EBITDA was an all-time record in absolute dollars, and was driven by a combination of the 76% marginal flow through on the incremental $12.3 million bookings at the higher guidance coupled with disciplined OpEx management.We generated free cash flow with $31.05 million in the third quarter and $45.9 million for the last 12 months. This is up 90% compared to the prior 12-month period ended September of 2019 and reflects our scale margins in the second and third quarter. Our cash balance at the end of the quarter was $318.1 million, which amply supports our acquisition plans. We are raising guidance for the fourth quarter and full year, reflecting both the third quarter beat and raise. We expect fourth quarter bookings in the range of $119.5 million to $124.5 million, representing a 12.6% increase at the midpoint over last year's fourth quarter. Compared to the fourth quarter of 2019, we expect each of our three growth games plus Kim Kardashian Hollywood to grow on a year over year basis benefiting from the increased monetization that we have realized throughout the year.As it relates to UA investments and profitability on an adjusted EBITDA basis, I'd like to provide some context for our strategy in the fourth quarter. On the expense side, at the midpoint of our bookings guidance, we expect UA cost to be approximately $19 million with other adjusted operating expenses of $38.5 million. CPIs are seasonally high in the fourth quarter due to holiday e-commerce spend. This year CPIs are also pressured higher due to the election spending on Facebook and other social media platforms. In the face of this environment, we plan to dial back our UA investment in the fourth quarter and start investing more, late December and early in the first quarter of 2021 to leverage the markup and CPIs drop.For the full year we expect bookings in the range of $555.3 million to $560.3 million. At the midpoint that represents a 31.8% increase over the prior year plus outstanding performance from our three growth games, the resurgence of Kim Kardashian Hollywood, a full contribution from Diner Dash adventures and the successful launch of Disney Sorcerer's Arena.And looking at expenses at the midpoint of our bookings guidance we expect UA marketing will be Sorcerer's Arena. And looking at expenses at the midpoint of our bookings guidance we expect UA marketing will be $146.1 million or 26.2% of bookings and all other adjusted operating expenses are forecasted to be $148.1 million. We expect to end the year with at least $365 million of cash and no debt, which represents significant free cash flow generation. I would point out that in the fourth quarter; we expect to receive four monthly AR payments from Apple with only two monthly payments in the first quarter of 2021. This happened last Q4 and thus, our final 2020 cash flow statement will be flagged 12 months of payments from Apple.As we look to 2021. In addition to our focus on UA efficiencies to produce higher marginal flow through to the bottom line, we are fine tuning our investment strategy supporting new title launches. In the past I've spoken about the four phases of profitability around the new title launch. Beginning with our first launch in 2021, we expect to take a soft launch approach, which would allow us to leverage organic installs from featuring cross promotion and lower CPI costs over a longer period of time. This soft launch approach we believe will significantly reduce the operating loss in the first full quarter of launch and accelerate the timeline to profitability for each game. We have previously launched titles using this investment approach. So this is less of a new process, but more of a reflection of our strategic priority to drive scaled margins in 2021 and beyond.When categorizing our titles, we've used the baseball analogies of singles, doubles, triples, and so on. Singles have bookings that range from $25 million to $75 million per year and have low studio margins due to the lower scale. Diner Dash adventures, Disney Sorcerer's Arena and Kim Kardashian Hollywood fit that category. Doubles can range from $75 million to $150 million in annual bookings, and have studio margins that range from 25% to 30%. Covet fashion and the Tap Sports baseball franchise are doubles. Design home is a triple with expected bookings of $210 million in 2020 and its studio margins are also higher than our other two road games. I would refer you to our Investor Relations slide deck for the full table outlining our definitions of the three phases and the bookings and scale game bars and ranges for singles, doubles, etcetera.Our statements strategy is a stack booking from new titles on top of growing our three growth games. To the extent that we add more growth games we believe that our EBITDA margins will continue to expand as a percentage of bookings. I'll now provide some directional comments in our outlook for bookings for the full year 2021. And looking at next year on a preliminary basis, we expect bookings from our current live titles in the range of $595 million to $605 million. This comprises our three growth games to grow 8% to 10% on a year over year basis.We anticipate that the combination of bookings from our potential growth games and catalog titles will produce flat to low single digit percentage of bookings year over year. For modeling purposes we expected the first quarter of 2021 will be largely flat from our high-end guidance for the fourth quarter of 2020. Reflecting further seasonality in Tap Sports Baseball, but offset by strength from increased UA spend in the first quarter. Not including this booking guidance range, our contributions from the launch of four new original IP titles in 2021. When we provide formal guidance in 2021 in February, we will continue our methodology of not including bookings from games that are not yet live, Table and Taste and Deer Hunter World are exciting games we believe have the potential to be scaled growth games.We believe that they can be mid to high singles in our baseball parlance in the first 12 months, and grow into doubles within the first 24 months after launch, which if achieved should drive significant margin expansion. In addition to the new titles expected to drive top line growth in 2021, we are confident that we will execute on our acquisition strategy to help us scale our bookings. Given our strong performance in 2020 and that momentum we are building we expect to generate increased profitability on an adjusted EBITDA basis with continued year over year margin expansion in 2021.We expect 2021 adjusted EBITDA margin expansion of approximately 220 basis points to 420 basis points from our current midpoint guidance for the full year 2020 expectations. This margin profile for 2021 is inclusive of new title contribution. Adjusted EBITDA margins are expected to be a high single digit percentage of bookings in the first quarter to the Tap Sports Baseball seasonality, and our ramp spend in UA due to the seasonally lower CPIs in January and February.I'm very pleased with our strong third quarter results on the top and bottom line and the increased outlook for 2020. The combination of the more efficient UA investments coupled with our discipline, OpEx management has allowed us to scale margins from the first to third quarter. And we believe again to the fourth quarter. We believe that our robust 2021 News title slate of four original IP titles and momentum in our three growth games will drive meaningful growth and margin expansion. I look forward to providing you with an update on our progress on the February earnings call.With that, we'll open the call for questions. Operator?Question-and-Answer Session Operator [Operator Instructions] Your first question comes from Mike Hickey with Benchmark.MikeHickey Hey, Nick and Eric. You guys are good, congrats on your quarter. Thanks for taking my questions. First question on M&A, you've clearly been patient, I think when you look at your cash balance and sort of what your peers are doing, but now you've seen sort of primed and maybe identified targets and what exactly do you mean by a transformative deal and then I have a follow up. Thanks.NickEarl Hey, Mike. Thanks for the question. So we've been talking a lot about M&A. We still don't have a deal to announce. But I can tell you that we are very much evaluating multiple companies right now. We've got an enormous emphasis on M&A. We just think this is a critical part of our growth strategy and given our cash position, we think we're well positioned to find something and make the decision to go with it. What we mean by transformative is think about what Crowdstar did for Glu four years ago, if you remember that. It really transformed the company. And that was only a roughly $50 million acquisition. But outside we've seen, excuse me with the way we've been able to leverage our infrastructure, and partner with the incredible talent with that group has just taken it to a level that has really changed the company. So that's really what we mean. We think we're able to expand the top end of the range in terms of what we spent.MikeHickey Cool. The second question for me. Congrats, I guess on the reveal of cable and taste looks very interesting. Can you just sort of download, I guess, a few things for us how you sort of balanced this between domestic and international opportunity, maybe what you've done internally within Crowdstar in terms of team size, and what engine, whether that's new or you're leveraging something else from your portfolio? Then within the alpha phase, just sort of as much as you can, what you're seeing sort of engagement retention and monetization. Then I guess, lastly, really curious about the Crowdstar moment, it sounds hyper-casual, just curious how far you are along the development curve there and when you think you'd be able to sort of deploy that to drive new way for your three growth games, I'm guessing table via growth game?NickEarl That's sort of our expectation. This is a game that allows players to really engage with food in a very aesthetic way. So pairings the food, recipes, the decor, just getting that full dining experience. For anyone who watches the Food Network, I think you get a sense of just how much interest and excitement there is about this general space. What we like about this game is that it really stands on the shoulders of our two giants, Covet Fashion and Design Home in terms of the structure and the construct. The very engaging core loop of you build something you've submitted for voting, it's very social, has a very deep elder game and we're continuing to improve that and expand that, as we expand the live ops. All of that learning goes into table and tastes but it's in a theme that we believe is much more ubiquitous and broad to decor and fashion just given that everyone eats every single day, and obviously has a lot of interest in food. So from that perspective, we think this is a really interesting game. It leverages the expertise that's in the studio, we've had several of the key leaders internally in Crowdstar move over to add this out. We add spots and people so very talented people from the gaming industry and beyond to join and brought people over from the other games. So there's really been this kind of mitosis in the Crowdstar studio, where we've split into multiple teams, and really expanded based on the talent there. So very excited about it, it's on the Unity engine. It has the look and feel of a Crowdstar game but just the way the Design Home leverage the learning from Covet Fashion and is roughly three or four acts the size, we think this is just a big opportunity because of the learning that has been laid out. It turns out Crowdstar moments, which is, just another piece of the Crowdstar puzzle for us. This is really an opportunity for us to build a platform where we can engage users at low CPI, bring them in and cross-promote them to the higher LTV games, all three of the big Crowdstar games. We think this is an exciting time to do it because of the challenges that do exist on the user acquisition front. We think this is a good mitigation and offset to that potentially. These are hyper-casual games that are very simple in terms of the loop and the mechanic but unlike other hyper-casual games out there, these are very, very high aesthetic, very rich graphics, really beautiful to look at and we think they're going to bring in that user, introduce them to being in this space and then we have an opportunity to cross-promote them into the higher LTV games. It's not out just yet. We've been testing it in close fashion, but we'll be getting that out in beta and launching it shortly. We think this could be a contributor to next year. Not only as a standalone set of games, but also as a platform to bring in very qualified users into the Crowdstar set of games.EricLudwig Just two things to add here. On the back to table and taste. On the broader appeal, Nick touched on this a bit but I think the great thing about tables as the audience, we're going after here, we think there's going to be more broad demographic, male, female, more broad demographic, international versus domestic, as well as more broad demographic appeal age-wise. So I think that's kind of point number one. Then we have had this game in a closed alpha. For where that title was, closed alpha compared to Design Home and Covet Fashion. We're pleased with the improvements in monitors and - sorry, improvements in KPIs compared to where Design Home and Covet Fashion were at that same stage.MikeHickey Good stuff. One quick one, before I go here, the Crowdstar moment, is that Crowdstar that is in fact, developing that hyper-casual portfolio or is that a new studio you guys have created?EricLudwig Yes, that is Crowdstar. We've extended Crowdstar, and grown from being here in San Francisco to our Toronto studio, which is a very talented group that among other games is responsible for Kim. They've had some excess capacity there and they have been really hungry to expand what they're working on. So that studio now reports into the Crowdstar like in a larger group, and they are going to be working in partnership with folks here. They're going to be working primarily on the Crowdstar moment so part of GLUU and part of the existing infrastructure and kind of all of the capabilities that we've got the vernacular the whole bit but expanding out from the Bay Area footprint that Crowdstar has traditionally been in.MikeHickey All right, good stuff. Good luck, guys. Thank you.EricLudwig All right. Thanks, Mike. Thanks for the questions.Operator Your next question comes from Tyler Parker with KeyBanc.Unidentified Analyst Hi, guys, this is Ashley on for Tyler. Just two for me. The first one, given the focus on your margin flow through how should we think about floor level margins going forward? Should it be 15% growth rate or are you guys not seeing any gain? Then, beyond Diner Dash, you guys touched on the weakness versus last year and if I'm not mistaken guide for it to grow in fourth Q? I'm just curious if we can get an update on how should the game to perform moving forward. Thanks.EricLudwig Great. Thanks, Ashley. On the first topic about margins, I think if you look at our stated guidance for 2021, of growing 220 to 420 basis points off of the full year guidance, you'll get to a 15% to 17% margin, and that is inclusive of new title launches expected next year. New title launches will be kind of overall bottom line in absolute dollars contributory, not a big amount but they are not bigger than 15% to 17% margin. So the core business is strong and growing and new titles are our investments, but overall contributory and absolute dollars for the year to a small, small degree. We're very, very pleased with being able to grow from two years ago 10% margins and 10% margins this year, about 12.6% margins and into 15% to 17% next year. Then in terms of Diner Dash adventures, when you look at my three phases of profitability to scaled title launches, Diner Dash is kind of firmly in that middle phase, Phase 2. As an overall title right now, total revenue minus total costs allocated, it is in the post breakeven phase so it's kind of scaling its way up. The bigger question will be where is the growth profile? Is that a mid-single? Does it grow from a mid-single to a high single in my baseball parlance? Right now at my current quarter, nine and change you see it's in the $35 million to $40 million. So that would be kind of a low to mid-single. Our goal is really to turn low singles into high singles, high singles into doubles, and so on and so forth. We've proven that out with Design Home coming out of the gates and becoming a double the first year and now it's a triple four years on. Covet Fashion when we acquired Crowdstar was a title that was sticking right about $42 million to $45 million a year for several years running.Now, that team is fantastically growing that in double-digit in the last three years to $80-plus million of booking so that is really our focus is a stack bookings, to grow growth games, and then to move these growth games from the singles to doubles, doubles to triples and God willing, triples to home runs and beyond that would be a great goal for us.Unidentified Analyst Great. Thanks, guys.EricLudwig Thanks, Ashley.NickEarl Thank you.Operator [Operator Instructions] Your next question comes from Darren Aftahi with ROTH.Unidentified Analyst Hi, thanks for taking my question. This is Dawn [ph] on for Darren. First one around user acquisition. You talked a little bit about some of the efficiencies you're seeing. How big of a driver in 2021 is the Crowdstar moment game with sort of like the cobranding and organic into helping the creativeness that you're sort of projecting for 2021 margins?EricLudwig Yes, so - hey, Dawn, good to catch up on. So first off, talking about the UA efficiencies, we've grown our daily conversions, so - today - how many people spend in a game on a daily basis over the last two years, we've grown that from 3% to 5% [ph]; so very significant improvement in conversion. So what that really says is that, in this industry in - starting in our case, 95% of people we get as either organic downloads or paid downloads do not spend in the game. So there's a vast opportunity, the more efficient, the more you can do a better job in the UA function. And you move that needle even slightly, it becomes a huge multiplier effect. So that - what we have done over the last, I'd call it the last 24 months, but really the last 12 months, under new leadership and under our refined focus on UA is really trying to do a much better job at identify - people - talking about people, process, technology around the UA function, building a better team, getting them more embedded with the game teams, doing on the process side, being able to kill losing campaigns while they're happening. And then even more importantly, being able to redeploy those dollars to campaigns that are actually more efficient. And then you'll be deploying technology.So all of this is really, over the last two years, we've improved our conversion. The last year, a lot of that improvements is coming back, so, this UA efficiency. So then it gets the Crowdstar moments. Crowdstar moments is - this is a hyper-casual suite. I would set expectations that we're going to have many, many titles watching under the Crowdstar launch premise. This is not going to be one title. This will be a suite of games.And our expectation is that every - one out of three, or one of the four are the ones we put out there will be successful, and the others won't be. And this is going to be a little bit of throwing spaghetti against the wall and seeing what sticks. But our whole goal here is, can we build a business, an ad-based business, you're buying users for very cheap, low CPI, which is the hallmark of the hyper-casual space. And if we could be breakeven or contributory to the bottom line from just that ad revenue from those users, that'd be fantastic. That'd be a win right in and of itself. Secondly, can we then become successful as we build that Crowdstar moments user base, can we bring 2% to 10% of them and convert them into a higher monetized or into a higher player in Design Home, Covet Fashion or Table & Taste?And if we can do that, we're arbitraging CPI. We're buying users for $0.25. And instead, we're converting them over into a Design Home, Covet Fashion or Table & Taste where CPIs are in the $4, or $5 or $6. So you can see if we can be successful to fund a great cross-promotion campaign and have a business that's breakeven or profitable, it's a win-win situation. So that is what we're excited about as we move forward into crosshair moments, as well as talking about our UA efficiencies.Unidentified Analyst Got it, thank you, it's really quite helpful. On the new game, soft launch strategy, could you go to - sort of go into depth a little bit more about what exactly that means? And then how do you judge when's the right time to sort of go with a more aggressive approach on UA for those new games during the soft launch?EricLudwig Yes. Great question. So, I say this is not so much a new approach. We used to watch games this way, three, four, five years ago. I would say really the two most recent launches, Diner Dash adventures last year, and Disney Sources Arena this year. You know, we lean heavy into UA in the first quarter of launch. And what that looked like was Diner Dash is a great example, we came out of the gate, we put a lot of CPI - UA dollars when CPIs were low, we had a fantastic third quarter of last year in terms of bookings downloads. But then we kind of had a bit of a hangover when we then dialed back. And we kind of had the unfortunate circumstances of launching Diner Dash in the third quarter, when CPIs normalized, and then we got to the fourth quarter, and CPIs always skyrocket. So we kind of were set up for not the greatest success by spending great low CPI, and then we had to reverse and spend less. And then what you saw was revenue go down.Now, that - for - that second quarter of launch for Diner Dash, it was actually breakeven and profitable. So it kind of got to phase two of my definition quickly. Disney - we probably would not have done anything differently on Disney because, frankly, we launched Disney into shelter-in-place when CPIs were fantastic. So I would say if we ever come across an environment of CPIs like we saw in March, late March and April, maybe in early May, I probably would throw out this soft launch approach. And I would gobble up all of the organic or the paid users I could. That being said, in normalized environments, we believe that harvesting the cross-promotion of our own brands, harvesting the brand marketing that we build up around a title launch as Table & Taste gets to launching, we will be doing brand marketing, we'll be doing cross-promotion, we will have Apple and Google featuring. And then the other thing we also want to avoid is spending too much on UA to then drive up CPI, and then you kind of become your own worst enemy.So the other part of the soft launch approach is to kind of ease ourselves into slowly get that CPI going up as we're spending more. And we can hopefully harvest under the curve, that - those favorable CPIs and favorable users over a longer period of time. But again, I would make it very clear that I encourage you to look at the chart in the IR presentation that really talks about both the three phases, as well as the baseball analogy. We expect kind of one-quarter of launch to where a title will be kind of operating losses, not massive, not like we saw with Diner Dash and Disney, but kind of modest operating losses. And then our plan over the next a quarter is to go from loss to then breakeven to scale profitability. And I lay out what scale profitability looks like for a single, for a double, for a triple, a home run and a Grand Slam. And so when we talk about get over 24 months, wherever - whatever station in life a title will become, if a game is going to become a single in two years, then it'll get to that 15% to 20% margin. If it's going to be a double, it'll be the 25% to 30% category, and so on and so forth.Now, lastly, what I would say is, we do see games go from a station in life with a rat, and then they grow. Design Home's gone from zero, to a double, now to a triple, and it's approaching a home run, as it gets to over a $250 million [ph] a year booking. So it does continue to grow. So we were always looking at how we continue to optimize these games, but yes, that's kind of how that rolls out.Unidentified Analyst Great, thank you. Last one, if I may, are you able to quantify, at all, sort of the engagement from an e-commerce perspective on Design Home? Maybe like sort of the amount of users that you're seeing on sort of a daily or monthly basis that are actually sort of taking that trajectory?EricLudwig Yes, nothing to announce at this moment. I will say that we are pleased with the Design Home inspired performance to date. It's probably too early to be talking about metrics and impact to the business yet. But we are - it's a success. And we're looking forward to continuing investing in Design Home inspired.NickEarl Yes, the one thing I'd add is that, as you know, we had a first run with this a few months - a couple quarters ago, and while that didn't work out, per se, we learned a lot about what to do and what not to do. And as we've moved to a new partner, and as we're really building this out, we feel like we're on a just a much more informed and better place with which to build this part of the business. It's a - this is a new function to merge e-commerce and games, as you know, and we're really first to do it. So we're learning a lot, but we feel like we're really on a good trajectory with this. And we'll continue to build it. And as you start to get KPIs that are meaningful, we will - yes, we'll share those with you, but right now, I think I would be just happy in saying that we're definitely going the right direction.Unidentified Analyst Great. Thanks, guys.NickEarl All right, thanks, Dawn.EricLudwig Thanks, Dawn.Operator Your next question comes from Franco Granda with DA Davidson.FrancoGranda Hey, guys. I thank you for taking my questions and congrats on those strong results. You've obviously put a lot of thought into IDFA and the impact that it has on your business. You're introducing Crowdstar moments to kind of combat this. Can you perhaps speak to how IDFA will impact your new UA platform as it stands for the changes you've introduced for this past year?NickEarl Yes, sure. Hey, Franco. So yes, this continues, like a lot of our peers in the space, to be a real key focus for us. We certainly have a lot of respect for IDFA and the change you could bring. With that said, we've been working diligently for the last six months, and we've got another few months at least, to prepare for this. So we're very confident as we sit here. It's really pushed us to do a few things. One is the cross-promotion, plus we talked about Crowdstar moments, we are leaning heavily into branding. Basically, anything to increase organics and reduce reliance on paid media, we're exploring. Working on technology and process to make sure that the users we bring in are ultimately going to be engaged and hopefully, spanned but certainly engaged.We're very fortunate in that the vast part of our portfolio is really around these lifestyle and casual games, and we just think they're - that they are way less affected and susceptible to changes from IDA, partly because they're big brands, and partly because they're not dependent and reliant on the really big spenders, they're much more dependent on engaged kind of high spender frequency and more volume of user. So we think we're in good shape there. Other tech we're building is - and process around probabilistic marketing models, anything to predict player value and create a better understanding of what sort of value they're going to bring to the table. So I think if you look across people, process, technology, the fact that we've been preparing for a long time, the fact that most of our games are in the lifestyle and casual space, even our sports games, which are more core, have really strong brands and attract organics.And then, the data-led approach in our process and the way we use data science. I think we're well-positioned. No one knows how it's going to play out from a quantitative perspective. But I think from a qualitative perspective, we feel like we're doing the right things. And we're as - we will - we are right now and we'll be in good shape when that actually rolls out.FrancoGranda Awesome. Thanks for the color, Nick. I have 1 more question, if I may. So you clearly expect Deer Hunter and Table & Taste to be your biggest launches next year. Can you perhaps speak to Tap Sports Fishing? The timing of the launch as well as how you [indiscernible]. Thank you.NickEarl Yes, yes, and thanks for asking about Tap Sports Fishing. It's a game that we're really happy with, we're really looking forward. This is just an early beta right now, it's been really working out the bugs from a stability perspective. And now we'll be getting into Australia, and really testing out the core loop that we've been building that the team has been focused on. So it's still early stage, but the indications are very positive. And what we like about this game is that you've got that really nice combination of a highly engaging core loop and mechanic. It's really fun to fish. And then you've got that real depth, that really social meta depth and PVP play and really strong user flow that gets you into the elder game for the ultimate spender frequency, spender depth and driving that LTV.You put those the - two things together with a theme and an outdoor activity that people absolutely love around the world. It's just people are so unbelievably passionate about fishing. So we think we think we're onto something there. And it's developed by the very talented Glu Sports Group that does Deer Hunter and Baseball. So we're looking forward to them showing up with two big games in 2021. No specific update on timing other than to say 2021, but as we get into the Q4 earnings call and beyond, we'll be talking more about this one, for certain.FrancoGranda Awesome, thank you.NickEarl All right, thanks, Franco.Operator I'm showing there are no further questions at this time. Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect. Goodbye.:]