Glu Mobile Inc
Q4 2018 Earnings Call Transcript

Published: 5 Feb 2019

[Operator:]

Good day ladies and gentlemen and welcome to the Q4 2018 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 be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Harman Singh, VP of Finance and Investor Relations. Sir, please begin.

[Harman Singh:]

Thank you, operator. Good afternoon everyone and thank you for joining us on Glu Mobile's fourth quarter 2018 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. 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 our 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 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 or 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 non-GAAP operating expenses totals 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're 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 earnings conference call. And with that, I'd like to turn the call over to Nick.

[Nick Earl:]

Thanks Harman. Hello and thank you for joining us for Glu's fourth quarter and full year 2018 earnings conference call. I'll review highlights from our strong fourth quarter and year and then provide an update on our current titles, new game development plans, and long-term outlook. Following that, Eric will discuss our financial results in more detail and provide first quarter guidance and an update to the 2019 outlook we provided last quarter. I'm pleased to say that 2018 was a great year for Glu and its shareholders. We achieved record bookings with the year-over-year growth of 20%, as well as delivered increasing adjusted EBITDA profitability on a year-over-year basis, and a significant free cash flow. We also expanded our adjusted EBITDA margin to double-digits reflecting the leverage in our business. Our strong financial results were due to the successful execution of our live ops strategy through enhanced gaming experience, improved merchandising and strategic ad placement. We have a profitable and expanding core business and we are excited about the upside potential of the new launches planned for this year and next. Glu finished the year on a high note with a strong fourth quarter performance as bookings increased 18% year-over-year to $98.2 million. Bookings were higher-than-expected and included another quarter of sequential growth from Design Home and Covet Fashion, along with a strong performance from Tap Sports Baseball and a seasonally soft quarter. Adjusted EBITDA profitability also increased for the fourth consecutive quarter and we generated free cash flow of $17.3 million. These financial results reflect our longer-term strategy of creating Growth games that deliver repeatable bookings and strong profitability. The annual bookings for Design Home, Covet Fashion and Tap Sports Baseball collectively grew by 53% year-over-year and contributed 74% of total annual bookings. In the fourth quarter, Design Home bookings grew 46% year-over-year to $43.9 million delivering another quarter of outperformance. For the full year, Design Home generated a $57.7 million in bookings compared with $97.7 million in 2017. We continue to add updates and events that drove a meaningful increase in average bookings per DAU. We also have a several additional updates that are planned which we believe will drive further growth. We're pleased with the early results from that meta game update and closed beta testing and expect meta features to be integrated into the game and live by the end of Q2. We have initiated our cauterization efforts and are partnering with Caconey [ph], a Japanese game developer and publisher to launch Ramaz [ph], an international version of Design Home for the Japanese and South Korean markets. Additionally, we will be launching an e-commerce feature through a vertical partner more to come on this, but we expect it to launch by the year-end. Covet Fashion grew bookings to $14.8 million in the quarter, a 49% increase over last year's fourth quarter. For the full year, Covet grew bookings 28% year-over-year to $53.4 million. We have continued to increase bookings, drive monetization and lower CPIs. We have streamlined our advertising placements leading to an increasing ad revenue contribution and created several new updates and series. We rolled out Style Challenges in collaboration with Disney games with the latest service featuring Looks inspired by iconic Disney princesses including Cinderella, Ariel, Jasmine, Belle and many more. We continue to expand the social layers of the game through improvements to our fashion houses and rallies. We are also hosting real-world community events such Covacom [ph], a gathering that brings covet to life by connecting users to explore the game behind the scenes along with some of our brand partners. Looking forward, we are introducing a more breadth to the title with the addition of prop shop which will add new forms of content including accessories like umbrellas, handbags and strollers. The Tap Sports Baseball franchise had a better-than-anticipated quarter with bookings growth of 38% year-over-year despite the traditional seasonal slowdown. For the full year, bookings reached a new record of $75.2 million growing 57% over prior year's strong performance. These results were driven by successful updates which included merchandising improvements, a focus on the elimination of exploits and value creation for existing user base with new events and features. Tap Sports Baseball 2019 will move into beta next week. The TSB team has fine-tuned the engine and Elder game allowing us to continue building on a great base. TSB 2019 will also feature a new cover athlete in addition to new legends, more club events, improved security against exploits and buildout of subscriptions. We believe these new features combined with our ability to enhance our merchandising and advertising will lead to continued growth in 2019. We have three new launches which are all in various stages of development that are planned to go live in the May to August 2019 timeframe tightening our launch range by one month. And as remarks Eric will provide our outlook for expected bookings contributions for the titles that are currently live in beta. We continue to work on WWE and our testing of third generation of the game mechanic. We are optimistic this version will resonate with the WWE fans worldwide. We expect this title will be a solid contributor to our portfolio and we look forward to the full launch this year. Diner DASH Town has been embedded in fuller pace since last quarter and the early results have been promising. The title will go live in three more countries this month as we continue to make improvements with every new beta release. Stay tuned for additional updates as additional beta results come to life. Our third game in development of the result of a relationship with the Disney games team, it includes both Pixar and Walt Disney Animation Studios properties. Early casting has shown great engagement and a feedback with strong adjustment players. We are pleased with the progress our creative team has made and excited to see this game come alive for our fans. We remain on track for worldwide launch in the early Q3 of this year. However, we have extended development additional few weeks to include more features in the beta before we begin beta testing the game later in Q1. Looking ahead, we continue to have a very active development pipeline in addition to the three titles we planned to launch this year; we have three additional games in various stages of development for the 2020 timeframe. All three of these titles are original Glu IP, providing favorable economics that we believe will position Glu for continued strong growth and adjusted EBITDA growth longer term. We are excited to share that one of these three titles will be the next generation of our successful Deer Hunter franchise and IP we acquired in 2012. Deer Hunter Next is being developed by our extremely capable Glu Sports team to create a force behind our Tap Sports Baseball franchise. The game will incorporated updated graphics and animations, more opportunities for player progression and collection, and a deeper meta layer alongside an existing improving game mechanic that our fans love. Deer Hunter games have been downloaded over 0.25 billion times since 2012 and we are looking forward to pairing this download potential with a more engaging and realistic experience for our players. We plan to have Deer Hunter Next in beta in late 2019 and we'll share more detail as we progress through the year. In closing, I'd like to thank everyone for joining today's call and for their continued support as well as the Glu team for making 2018 a terrific year. We very much look forward to carrying the momentum into this year and beyond. I'll now turn the call over to Eric.

[Eric Ludwig:]

Great. Thank you, Nick, and good afternoon to everyone on the call. I will provide further details on our financial results for the fourth quarter and record full year 2018, and then discuss our guidance for the first quarter and full year 2019. Our top line results for the fourth quarter and full year 2018 are as follows. Revenue was $95.6 million for the fourth quarter, a 19% year-over-year increase. For the full year, revenue grew 28% to $366.6 million. Fourth quarter bookings increased 18% to $98.2 million over last year's fourth quarter and full year bookings were $384.6 million, a 20% increase over 2017. I wanted to reflect the outstanding year we had in 2018. We increased bookings by $64.2 million without launching any new titles. We also saw significant marginal flow through to the bottom line as adjusted EBITDA margins went from negative to positive double digits. As Nick mentioned, the quarter and full year bookings growth was driven by continued strong performance in our Growth games. The comparisons I will go through for our Growth games will be on a year-over-year basis. Our three Growth games; Design Home, Covet Fashion, and Tap Sports Baseball in total contributed 74% of the bookings for the full year 2018 and grew 53% year-over-year. Design Home's bookings grew 46% to $43.9 million in the fourth quarter and reached $157.7 million for the full year, representing a 61% increase. Covet Fashion's bookings grew 49% to $14.8 million and for the full year bookings were $53.4 million, a 28% increase year-over-year. And the Tap Sports Baseball franchise outperformed the normal seasonal decline and generated $17.2 million of bookings for the fourth quarter, a 38% increase year-over-year. And for the full year, bookings were up 57% to $75.2 million. Another bright point this quarter was the performance of Kim Kardashian

[Jeff Cohen:]

Hey guys, thanks for taking my question. I noticed that the DAUs declined sequentially, while MAU’s increased. Is there anything to read into that? Or is that just noise? And then, I guess maybe could you break down how those metrics faired for growth risk catalog similar to how you guys did last quarter?

[Nick Earl:]

Hi, Jeff. Good to have you onboard. Yes, the DAUs have dropped a little bit and we look at that as the three growth games they’ve got older, they have increased in DAU. And the -- as the catalog games have got all that they have decreased overall the blended number is down. We don't read into it too much. We will actually see a big turnaround. We believe there will be a big turn up with our DAU at MAU this year as we launch the new games. The numbers that we are watching really closely here are the average bookings per DAU increase and that's just speaks to the facto, we're just monetizing so much better, especially in the Growth games and that's really the engine of growth for us this year and even last as well.

[Eric Ludwig:]

Yes, Jeff. I refer you back to the IR deck and the appendix. We’ve now broken out this quarter both the DAU and ARPDAU for our Growth games and for our catalog games. So really you saw growth on a year-over-year basis from our Growth titles on the DAU basis, $1.5 million DAU on Growth titles last Q4 that grew to $1.7 million from the three Growth games. Our catalog titles declined year-over-year from 2.3 million down to 1.5 million as expected as you would for these titles. But I think more impressively and more focusing would be, what happened on the average bookings per daily active users. And what you saw there was a 20% increase from the Growth titles growing from $0.40 average bookings per daily active Q4 last year to $0.47 this Q4. And the catalog titles, even though we had a declining overall DAU base had a slight uptick from $0.14 last Q4 to $0.17. But I do think the big trend that Nick talked about is really, as we launch new Growth titles or new titles that we believe will be Growth titles, we will be stacking those new total revenues on top of our current Growth games. And then we also believe that those will have a higher average bookings per daily active users than our legacy Catalog titles. So the overall number should be going up.

[Jeff Cohen:]

Thanks guys. That's really helpful. I guess, just as a quick follow-up, I know you've been rolling out as more heavily into Design Home and Covet Fashion. What inning you would say we are in that process? And I guess how is that rollout gone so far compared to maybe your expectations?

[Nick Earl:]

Yes. Great question, Jeff and first of all, thanks for picking up coverage earlier this month. So Covet really is leading the charge on the ad revenue for the Crowdstar titles. From June to December, we saw a significant uptick from about 10% of revenue from Covet Fashion peaking at about 20% in the month of December as they really rolled out rewarded video across that game. Design Home is obviously focused on things like getting a different meta, the e-commerce with our partnership with Caconey from – sorry, not e-commerce -- with Ramaz from Caconey in Japan, as well as e-commerce with a partner that we are yet to announce. So ads on Design Home will lag and we are in there currently sitting at about 10% today. So I think Design Homes were at Covet was last year and they'll be rolling out more ads over time, but Covet has done a really good job at fully penetrating the ad revenue for that title.

[Jeff Cohen:]

Great. Thank you, Nick.

[Nick Earl:]

Thanks, Jeff.

[Operator:]

And our next question comes from the line of Doug Creutz from Cowen & Company. Your line is now open.

[Doug Creutz:]

Hey. Thanks. You mentioned that you had three games in 2020 are owned IPs and you've talked about Deer Hunter. I'm just wondering from the other two, I know you're not going to say what they are but could you at least say are those new IPs? Or based on existing IPs? Thanks.

[Eric Ludwig:]

Yeah. Hey, Doug. We haven't said anything about another than original IP. And I think what I would say now is that they are not existing properties the way that we really – we've got this team here of looking at some things in our catalog and bringing back to life with all of the learning's we've made over the last couple of years all the earnings we've had for example Diner DASH Town after DASH franchise obviously Deer Hunter next. The two that are unannounced are original IPs in the pure sense. So they're not based on anything old. That doesn't rule out the opportunity or the option to delve back into the catalog at a later date or even for next year, but the two that we're referring to are two truly pure new IPs.

[Doug Creutz:]

Okay. Great. Thank you.

[Eric Ludwig:]

Thanks, Doug.

[Operator:]

And our next question comes from the line of Drew Crum from Stifel. Your line is now open.

[Drew Crum:]

Okay. Thanks, Hey, guys, going forward.

[Eric Ludwig:]

Hey, Drew.

[Drew Crum:]

Just about the increase that you're forecasting for UA spend in 2019, it looks like about 8%. I guess, I would have thought that might be a little bit higher given your plans wants three new titles this year. Can you just talk about what's behind that increase? And then I have a follow-up.

[Eric Ludwig:]

Yeah, I mean, Doug this is Eric – sorry, Drew. As you know as I mentioned last quarter we will have three launches this year and we focus all of our UA spend on kind of high positive ROI post-launch. We will have I call it kind of one to two weeks of launch window, what we would spend non ROI-based base kind of escape velocity spending. This is really getting – getting the title out into orbit so to speak. But after that two-week period when Apple and Google finish any featuring, at that point everything is ROI-driven, an ROI-based. And we've already looked back at what we've been spending historically, for all of our titles and what we were expecting to spend for these titles that we're launching this year. And a combination of Disney having a broad co-marketing program with Disney as well as the Disney brand, we expect there to get some great organic downloads from that title. Diner DASH Town has a very, very broad background of users be having been around for 10 years as a brand. Then lastly, WWE. So we think we're brining the bare brands that have built an audience and that's going to allows us to alluded less on our post-escape velocity spending windows then we did two years ago when Design Home was at a certain high-level of spend and even this past year.

[Drew Crum:]

Got it. Okay. And then just a point of clarification on the first quarter bookings guidance. I know you guys had previously expected it to decline sequentially. But the slowdown year-on-year looks like it's about 2% to 4% growth year-on-year. Can you just address that in more detail? I know Tap Sports Baseball seasonal, but is there anything else behind that number?

[Eric Ludwig:]

Yeah, no, I mean – I think the biggest bulk of the decline is really baseball. I mean Baseball did $17.2 million in Q4. The other Growth games actually grew sequentially and year-over-year. But Baseball will decline another $7 million to $10 million from Q4 into Q1. So, all of that decline plus on this Baseball and the bulk of the balance is growing Design Home and Covet Fashion, but it's not offsetting the declines of Baseball.

[Drew Crum:]

Okay, got it. Okay, thanks guys.

[Nick Earl:]

Thanks Drew.

[Operator:]

And our next question comes from the line of Mike Hickey of The Benchmark Company. Your line is now open.

[Mike Hickey:]

Hey Nick, Eric, congrats on a strong quarter guys.

[Nick Earl:]

Hey Mike. Thank you.

[Mike Hickey:]

Thanks for taking my questions. Just curious you've given us sort of some framework on the contribution from WWE and Diner DASH, but you're hesitant, it looks like on Disney/Pixar. Obviously, I think people are looking for some bigger numbers there. And I think you have noted that you delayed the beta a couple of weeks. Just curious to sort of dive into the delay of beta? And maybe any framework in terms of contribution or perhaps you're not comfortable giving us some guidance there?

[Nick Earl:]

Yes, in fact the contribution that we're guiding is zero right now and that's because we're really trying to be disciplined about a -- taking a scientific approach to how we give guidance and having that guidance be based on beta data. As we talked about, this game as you so rightly pointed out last quarter, we actually did expect that the game would be in beta and we would be giving you guidance. And we if we had guided into beta before this call and had a couple of weeks to really look to the data, we absolutely would be including it in the $440 million guidance we've given for this year. We just decided that we wanted to spend a couple of extra weeks making sure that we had a few more features in there to ensure that it was fully feature-rich and complete experience. So, what we decided to do was move that beta out into late Q1 and while that would not give us data for this call, it just would give us a stronger beta data set that we could work off. So, in other words, we will be giving you lots of guidance and thoughts and those thoughts will come from our beta results and we'll be doing that in the next call. So, we're sorry that we're not able to get at this earnings call. We just felt the right thing to do was to make sure that we had all the features we wanted in there for beta.

[Eric Ludwig:]

Yes and there are two things I'd add to that is this extra time horizon for beta is not elongation of the original launch window. We still believe our original launch window, which Nick said was early Q3; that was when it was a quarter ago, that's where it remains today. That has not been changed at all. Secondly, we're really pleased and what we've seen in the privates -- internal testing as well as third-party user testing as well as Disney team testing as well. We're very, very pleased with where that game is coming out right now. But we want to use real data and real numbers to set our guidance. And I just thought it would be premature to talk about numbers. But we absolutely will be updating guidance in May for this title. And once this live in beta, folks will be able to pick it up and play and see the reviews and the numbers, et cetera.

[Mike Hickey:]

Okay. Good, that's helpful. Thank you, guys. I guess I'm just curious on your Crowdstar team. Obviously, they had Design Home and Covet Fashion. Are they been working on any new games? Or do they have any high flying call it outside of the work they're doing on the existing lab services?

[Eric Ludwig:]

Yeah, so that's unannounced and we've not talked about that at all. What I would say is that the studio is always looking for new additions to both Covet Fashion and Design Home as well as things that could be its own title, its own game. So there is small efforts underway always to be looking at what else we can do in the broad space of this lifestyle app/games and that could turn into a game one day or may be part of one of the existing franchises. So I’ll leave it at that. But I can tell you that we've got a very busy studio and they're always looking for interesting things to add in.

[Mike Hickey:]

Okay, cool. That’s it for me guys. Congrats and good luck.

[Eric Ludwig:]

Thanks, Mike.

[Nick Earl:]

Thanks, Mike.

[Operator:]

And our next question comes from the line of Darren Aftahi of Roth Capital Partners. Your line is now open.

[Darren Aftahi:]

Hi, guys, good afternoon. Thanks for taking my question. Two if I may. First on the – Nick, can you give updated thoughts on where the meta game updates are with Design Home? I know you said late 2Q? But is that how you're feeling about that? And then second question going back to one, of course, earlier ones Eric, I think if I look back, Tap Sports Baseball has just been stronger in general this year than it was last year. It only declined $3 million in bookings sequentially in the first quarter last year. So just maybe reiterating, is there anything else besides Tap Sports Baseball in terms of sequential declines from 4Q to 1Q? Thanks.

[Nick Earl:]

Hey, Darren, I'll take the first one and then I'll let Eric take that second one. So, yeah Design Home meta as you know has been in development for quite a while most of last year. We now have it in limited beta. So it is out there. It is really being tested. The early results were great. We're very happy with them. Like anything new, especially to a complex experience like Design Home just takes a lot of massaging and balancing to get it right. And as we've talked about a lot we’re very, very acutely careful about making sure that the addition of something like this doesn't do anything to the core loop that we've got into the core experience. That's why we're just being so methodical and so careful about how we integrated in and that's why we test. But the results are really good, we're really happy to what we're seeing so far, really impressed with what the team is doing and that will roll into the game by the end of Q2. So we'll start to see results and we be looking forward to talking to you about it.

[Eric Ludwig:]

Yeah. And Darren I've got no more additional commentary. Baseball did decline last year for the last Q4 to last Q1. And that as I said in the prepared remarks for the last question, all of our decline from the 98 and change and Q4 to our 89 at the midpoint for Q1 is coming from baseball and we've got slight growth on the other titles, I mean growth titles, but it's all baseball decline. But it's just coming off a bigger number, you've got remember. Baseball is more resilient Q2 to Q3 of this year, it actually grew, whereas, last it declined and it declined less in Q4 than it did in Q1. So we're just forecasting a harsher decline in Q1 given that we hold forward monetization into Q2 -- Q3 and Q4 this year. And I mentioned that in my prepared remarks last quarter as well about the resiliency of this title. So that's really the explanation there.

[Darren Aftahi:]

And if I could squeeze in one more. So the $20 million, you've kind of handicap in bookings for the two new games. I guess, how would you kind of characterize the risk profile of those bookings? And these are kinds of the two significant first games you guys have launched under Nick being CEO safer some other stuff that was legacy. So I'm just kind of curious, is there any risk with this stuff being potentially pushed out? Or is it pretty ironclad are you going to get this out when the timeframe?

[Nick Earl:]

Yeah. I mean, look in this business, the risk with everything. As you well know, that said, we feel good about the timing of these two games. We feel good about the guidance we're giving. We're looking at the beta results and the changes that are being made during the beta time. The teams on top of both of them and I'd say our confidence is very high, what we're talking about and we'll obviously know a lot more as they role out to a larger scale and as we get to Canada than obviously worldwide.

[Eric Ludwig:]

And Darren, I would mention just this afternoon Diner DASH Town went into beta in two new countries New Zealand and Singapore and it's been sitting in the Philippines and Nick talked about in his remarks that we've been very happy with what we’ve seen there in the Philippines. We felt there was now time to get it to some new countries and you'll see that flowing through. And then another version iteration of the WWE will be also going alive later this month. And as Nick mentioned, we're pleased what we're seeing in both private beta as well as the rollout of those titles. So feel good about where we are on the guidance and the timing.

[Nick Earl:]

Yeah. One thing I would add Darren is that, by definition we won't launch something unless we believe it's going to be a growth game. So that doesn't necessarily mean that's that this is $100 million or $500 million out of the gate. This means that, it's going to grow year-over-year. We've really look very closely at how it's performing in beta and we look at engagement and retention, the early mid-and later retention as much as we have at least and monetization and assess whether we believe this will grow year-over-year. And we just won't launch a game unless we believe that's going to happen. So from that perspective we're also confident.

[Darren Aftahi:]

Great. That's helpful. Thanks guys.

[Nick Earl:]

All right. Thanks, Darren.

[Operator:]

And our last question comes from the line of Mike Olson of Piper Jaffray. Your line is now open.

[Mike Olson:]

Hey, good afternoon. You mentioned the new Deer Hunter title is going to be develop by some talent item from Tap Sports Baseball group. Is that a pretty typical practice for you guys to take development teams from other titles and then kind of retool new different titles? And I guess in this case for example, are the mechanics similar enough between the games? Or does that not even really matter? Or just I guess curious, how you think about shifting those resources around from one game to another?

[Nick Earl:]

Yeah. That's really good question. And by design, we went to this studio and asked them if I'd like to do Deer Hunter. We had a good sense of Deer Hunter was ready to have a next-generation version done. And in our world in our kind of studio of collection, the Tap Sports Baseball studio we call Glu Sports is absolutely the right studio to be working on that. It is normal practice to have teams kind of split and start something new. It keeps things fresh, interesting and creative for the talent in the studio. More importantly, they get to learn from their previous work and build on top of it. And this studio has been so incredibly successful for us with the growth of Tap Sports Baseball. We feel like both WWE and Dear Hunter next are just perfectly situated there. The design of the game, what we’re so excited about with Deer Hunter and the reason I wanted to talk about on this call, it's really the synthesis of a core mechanic that has done extremely well over the many years, it's been out in various forms and the download potential that this game has. We've seen just an unbelievable amount of downloads as I mentioned 0.25 billion since 2012. You take those two and you combine it with the Glu Sports ability to create a very, very deep meta game. And we believe those three components together is a recipe for a real potential hit if we pull this off. Furthermore, it's RIT so it’s margin rich and like we – like to call high calorie dollars. So from that perspective, we think there is a great business opportunity. But more importantly, we just think this is a potential great experience for the millions of people who love to play honey games regardless of whether they're really into hunting or not.

[Mike Olson:]

Okay. Make sense. And then as you mentioned you anticipate having a sizable cash balance by the end of the year. Just wondering what you're thinking on the M&A front? And maybe another way to ask it is, where does M&A fall in your various areas of focus compared to kind of just keeping your heads down and continuing to focus on organic growth of current and future titles? Thanks.

[Nick Earl:]

Yes. Great. So, yes, nothing has change there. I mean, we're always looking at the market and we've got a strong core dev group here that's doing all sorts of slicing and dicing of data numbers and making sure we're not going to miss anything that will be a good fit. But our strategy remains to be focused on internally generated games. As you guys all know, we are working very hard to deliver a game from soups to nuts that it was built here under this exact team's leadership. And we're highly focused on that. We're very confident that we're going to be able to do that and that is definitely the focus for Glu for the time being. We are also looking at M&A, but I really view acquisitions as nice to have not a must have. And when and if we find something that is a good cultural fit, that is a good logistical fit, a good financial fit, but mostly a good cultural fit, we'll certainly be looking at pulling a trigger and bringing them into the mix. But yes, nothing's really changed from where we were last year. And I like the fact that we're just very, very focused on delivering internally generated games and not wavering from that strategy for the time being.

[Mike Olson:]

Great. Thank you.

[Nick Earl:]

All right. Thanks, Mike.

[Operator:]

And I'm not showing any further questions at this time. I would now like to turn the call back to Nick Earl for closing remarks.

[Nick Earl:]

Great. All right. Thank you very much for joining everyone today. We look very much forward to our call next quarter. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.