Glu Mobile Inc
Q2 2015 Earnings Call Transcript

Published: 4 Aug 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Glu Mobile's Second Quarter 2015 Earnings Results 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, this conference call is being recorded. I would now like to turn the conference over to VP of Finance and Investor Relations, Mr. Greg Cannon, Sir, go ahead.

[Greg Cannon:]

Good afternoon, everyone and thank you for joining us on the Glu Mobile second quarter 2015 financial results conference call. This is Greg Cannon, VP of Finance and Investor Relations from Glu Mobile. On the call today we have Chairman and CEO, Niccolo de Masi; and COO and CFO, Eric Ludwig. During the course of this call, we will make forward-looking statements regarding future events and the future financial performance of the company. Any forward-looking statements that we may make today are based on assumptions that we believe 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 risk 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 factors are described more fully in our documents filed with the SEC, specifically the most recent reports on Form 10-K and Form 10-Q. During this call, unless otherwise stated, all financial results, metrics and guidance will be presented on a non-GAAP basis. The non-GAAP measures are not intended to be considered in isolation from, a substitute for 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 a quantitative reconciliation of those figures, please refer to today’s press release regarding our second quarter result, as well as the supplemental presentation accompanying today’s earnings call that can be accessed via our Investor website at www.glu.com/investors. Please also note that all references to EBITDA, our adjusted EBITDA calculations, which Glu defines as non-GAAP operating income or loss excluding depreciation. Finally, please note that during this call, we will be providing information regarding the total number of social followers of certain celebrities. We calculate total social followers by aggregating the total volume of friends and followers that celebrity has on Facebook, Twitter, Instagram, Vine, Vivo and Tumblr. Please not that these numbers will contain some overlap of these social audiences between channels and celebrities. With that, I’ll turn the call over to Niccolo.

[Niccolo de Masi:]

Good afternoon and welcome to everyone joining us as we discuss a solid quarter in which Glu delivered results ahead of expectations. We outperformed the midpoint of our Q2 2015 revenue guidance by 13%. Q2 revenue is up year-on-year by 64%. Q2 EBITDA came in ahead of the midpoint of guidance by $5.7 million. I am delighted this afternoon to make two excited announcements. The first is that we signed an exclusive multi-year mobile gaming partnership with Nicki Minaj. Nicki has more than a 100 million social followers and is the first female solo performer to have had seven singles on the Billboard hot 100 list simultaneously. Her achievements have been recognized industry wide by accolades including four American music awards, eight BET awards, four Billboard music awards and two MTV Music Video awards. Our Nicki Minaj game is expected to launch in the summer of 2016. This afternoon we also announced the signing of our first male celebrity gaming partner. Jason Statham. Jason Statham is one of the world’s most recognized action stars and appeal for the millennial male demographic, which is core to the success of any action game. Star of the transporter movie franchise and numerous other films, Jason Statham has over 50 million social followers and is partnering with us on a shooter title that is scheduled to launch by year-end. Our Q2 outperformance was underpinned by the continued success of our catalog titles. Kim Kardashian, Racing Rivals, Deer Hunter 2014 and Country Killer Sniper. We are pleased with the annuity like characteristics of our most successful title. As we combine frequent contempt and feature updates with numerous multi-channel marketing initiatives. Looking back at our launch in H1, I would summarize by saying firstly that our Terminator and Frontline Commando World War II titles both underperformed. Counter balancing this was outperformance from our top sports baseball and Cooking Dash releases. We are proud to be operating the number one grossing mobile baseball game for the second year in a row and are delighted with the efficiency of this studio Acqui-hire from 2013. We are confident in our continued investment in the sport genre and look forward to launch of Tap Sports Football over the next week. We are also particularly pleased with the monetization improvements we implemented between the launch of Diner Dash 10 last year and Cooking Dash 2016. It is evidence of Glu’s ability to integrate and turbo charge a studio acquired only a year ago. I believe that Cooking Dash’s progress is a testament to our ability to convert and nurture long standing IP in the free to play gaming space. Moving now to recent developments and momentum traction around our Mission Impossible – Rogue Nation title has been acceptable out of the gates. Downloads have been below expectations however the title has one of the highest LTV’s of any of our shooter games to date. Beta metrics on our Deer Hunter 2016 title point toward of being a robust performer. Eternity Warriors 4 of ever has slipped due to a key KPI being initially below par in beta. Significant progresses have made improving this metric and as such we anticipate the title performing well albeit contributing considerably more in 2016 and 2015. As we’ve mentioned in the past, our goal is to produce and launch titles that have the highest probability of success. We will not push out a title until we think it has reached its optimal point of incremental return on R&D. Our Sniper X title has also been delayed a couple of months, while the integrated Jason Statham’s likeness and voice over effects. We believe his social following will positively impact lifetime revenues of the game. Two other racing titles have been moved from Q4 2015 into 2016 in order to allow for resource to be used on mirror term celebrity games. I will now take a moment to discuss our highly anticipated 007 game. The first game with Bond title ever for mobile devices built using a free to play business model. As you will see when we release the official trailer, our James Bond game is highly innovative. We have been working closely with MGM and Neon Productions for two years to create a real-time strategy roll playing game that takes the player inside the mind of bond. Our game is mobile is first and built for the modern generation of gamers looking for entertainment, anywhere, anytime. It is a such not a first shooter like the prior console generation of 007 games. Our authentic collaboration with the creators of the world’s biggest movie franchise puts the player in the role of master spy handler. Build out your own MI-6 agency and deploy bond and other 00 agents to compete with Spy Agencies worldwide in real-time. With the help of MGM and Neon Productions in Hollywood we cast over a 100 real people of charters in the game. In addition, we incorporate the likenesses of many of the contemporary movies leading characters, including Daniel Craig and Ralph Fiennes. The game is photorealistic and highly differentiated in the RTS/RPG genre. A number of sustained top grossing titles in the App Stores over the past couple of years has been in the RCS/RPG genre, perfect for small foam factors and devoid of Dexter control as required in the shooter. Notable genre successes include Clash of Clans, Boom Beach, Game of War, and Kingdoms of Camelot. During the player versus player mechanics in cooperative [indiscernible] communities they nurture, RCS/RPG games have proven themselves able to hold top 50 grossing ranks for long periods of time. The trade-off however is often a slower revenue ramp in the first few month of the games operations and a typical Glu title. As a result of the slower ramp we anticipate the bond title not peaking until sometime in 2016 despite launching on October 1, 2015. In other recent development we have successfully recruited a team of industry experts in the invest express resource management space. As such we have opened a new studio in Portland Oregon that will launch its first game in this genre in H2 2016. This expansion of course comes at a cost of incremental OpEx. But as we have seen with Tap Sport Football and the Acqui-hires we made in 2013, we have proven we can achieve a very high return on these types of investments. In addition, the investment not only broadens Glu’s portfolio out to a seventh genre, but will also potentially support the expansion of our celebrity platform. Moving now to our celebrity platform, the additions of Nicki Minoj and Jason Statham to our portfolio takes the total social followers we anticipate supporting live games by the end of 2016 to nearly 650 million. I as such consider ourselves comfortably ahead of schedule and our stated goal of 1 billion social followers signed and live on our celebrity gaming platform by 2020. Our celebrity pipeline continues to ramp impressively as we signed exclusive multi-year partnerships with many of the world's most popular people. In order to show differentiation of our title we are making investments in terms of both additional headcount and more development time. And certainly we differentiate include social features and also spaced out our celebrity game launches. Mean that we now anticipate releasing one male and one female celebrity game in Q4 2015. The next two female celebrity games will both launch within the first half of 2016. Our celebrity partnerships are all long term in nature and exclusive. The decision to space out our female celebrity launch launches will impact Q4 2015 revenue. However, we believe this approach to be in a long-term interest of Glu. In 2015, we are on track to make over 150 net organic additions and full-time personnel. This is indeed a record for us. We do not expect to continue organically at this piece in 2016. And instead we will focus on driving return from our existing invest investments. Over the first half of 2015, we’ve elected to increase organic investment while also experiencing greater success from license licensed IP titles than previously anticipated. As a result of this investment and product launch delays, we are holding a midpoint of our full-year revenue range, but lowering fully already done expectations. Nevertheless we expect H2 to generate record Glu revenue. As 2015 becomes our biggest top line you're in our history thus far. And let me close by saying that in almost every case across the board. Slippage of H2 2015 titles is benefiting 2016’s fully a prospects. We as such remain optimistic of our long-term year-over-year outlook and growth. I now hand you over to Eric Ludwig for details on our financial performance and guidance.

[Eric Ludwig:]

Great, thank you Niccolo. I am pleased with our execution during the second quarter. We exceeded expectations across all key metrics. I will first detail the Q2 results and conclude by providing our outlook for the third quarter and full year of 2015. Our key financial highlights for the second quarter of 2015 are total revenue of $57.5 million, a 64% year-over-year increase. EBITDA was $1.7 million and our net income is $1.8 million or EPS of $0.01 per diluted share. All of these results were significantly above our guidance for the quarter. The second quarter also saw continued diversification in our revenues from both the top five titles and license IP. Our five largest titles during the second quarter represented 77% of total revenue, down slightly from the last quarter. The largest title remains Kim Kardashian

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Darren Aftahi. Sir, your line is open.

[Darren Aftahi:]

Hi guys, thanks for taking my questions. Just a couple, first, can you talk a little bit about what you are doing outside of variable marketing at the card Asian game in terms of – we saw a little bit of a rebound in ranking from May to June to July. Second question, in terms of pushing out some of the game titles on the celebrity side to 2016, I think you guys have hired some niche studios to address celebrity titles. Can you talk about – do you feel like you have adequate resources across the board on the development side or you feel like you need to hire more? Thanks.

[Niccolo de Masi:]

Sure. Hi, Darren, let me take the first one first and then second thereafter. So on a marketing front, when I said that there was a number of multichannel marketing initiatives, I was referring to not only of course continued sustained digital user acquisition techniques, but what we are doing is it’s more interesting that I think is benefited not only Kim Kardashian but also titles like Racing Rivals, have been call them semi celebrity cameos and events. So we’ve had the addition of some of Kim’s friends to the game in the last few months. We also ran a YouTube gamer call it influenza campaign in the sort of May timeframe. And with Racing Rivals, we had events using the WWE brand as well as other type of events that correspond and turbo boost let’s say the sales that we run every weekend and other addition to the game which continue regardless. So we’ve run a TV campaign that you might run it for analyst day as well for Kim’s title. So all in aggregate here, whilst we are very ROI driven and we look at the bump we get from every single one of these initiatives. We are pleased with our ability to keep effectively big titles big and running longer than we initially thought the start of this year. On the capacity front, no doubt that six, nine months ago we had to make some strategic decisions around how quickly we were going to try and effectively let’s say show up the market with regards to top tier influences and celebrities that could be good for gaming. Glu of course only had one location at the time building these types of games and we have spent a lot of energy in the past six or nine months, expanding that internally organically to multiple locations. So, we don't outsource anything, we haven't acquired anything directly for that yet, but as you can see with the Jason Statham deal, what we’re starting to do is look at celebrity partners as effectively an ongoing marketing asset, a long-term exclusive marketing assert for Glu that could be used in not only more demographics, but more engines then obviously Kim's game. And so the big driver of the spacing out of our titles is, yes differentiation of engines and of course all other elements of the visual look and feel of game. So, it is also a case of ensuring that Apple and Google can digest that and ensuring that beyond featuring the adjustment so to speak that our teams are able to get a fair run at any potential overlap being worked out of the system so to speak on the various stand basis. So, we've announced that we've signed nearly 650 million celebrity social followers and games will be live within 2016, there is obviously some overlap in that and there is also some overlap in how we've counted total social followers, but we believe both are very good proxy for the influencer poll of any individual person. So Nicki Minaj is a 100 million, most of our female partners are all actually at least in aggregate if you could Kendall and Kylie have 100 million, and we've been excellent if you look at the slide Darren in our investor deck this quarter, compared to prior quarters you can see that we’re not only good at who we sign, but we’re good at picking ones that are growing through audiences over time. So Glu’s total, call an indirect social following is growing organically in addition to us sign up new partners. And Jason Statham is a great example. There is very human with more than 50 million social followers in the world. And we are delighted that our first male partner is not only a big name, but also a powerful digital influencer. Does that tackle your question on those two?

[Darren Aftahi:]

It does. And just a clarification, I think on the fourth quarter you said that there is going to be one male or female celebrity game under…

[Niccolo de Masi:]

The one male and one female. One male and one female. So there will still be…

[Darren Aftahi:]

In the same game?

[Niccolo de Masi:]

No, no, no. They are two different games in Q4.

[Darren Aftahi:]

Okay, got you. Okay, thanks.

[Operator:]

Thank you. Our next question comes from the line of Doug Creutz, your line is open.

[Stephen Glagola:]

Hi this is Stephen Glagola for Doug. Niccolo and Eric at Analyst Day you said, you think the mobile market can continue growing at 20% or more for the next several years, have you guys seen anything since then to change that assumption?

[Niccolo de Masi:]

No we actually, just to be clear, we laid out Glu’s five-year CAGR as being in the 20% to 30% range. And as I said, in my prepared remarks, we are very much confident that that range will indeed be what happens on average as a CAGR in the next five years. The overall mobile market, you know we're not research analysts and we don't profess to have a bottom up view on what’s happening with penetration of phones, as well as people's proclivity to spend more time on phones except that obviously we anecdotally know and we included a new slide in our investor deck today that shows that at least according to some research mobile gaming is now the biggest single channel, biggest single platform, and the overall gaming ecosystem. So from that perspective, we very much believe that the rising tide that lifts all boats is strong and will be strong for the next five years. We continue to believe that emerging markets will see a lot of growth from incremental Smartphone penetration, but actually the whole world is still going to see significant penetration growth from tablet. So, we’re focused on the markets that can be needle movers for us, North America, China, Korea, Japan are all growth opportunities for us still and we are very bullish on the fact that on a 5, 10 year view all computing is growing ever more mobile and we have always been at the forefront of what mobile computing means, whether that is a phone, whether that is a Google Glass device or even potentially some other wearable.

[Stephen Glagola:]

Okay thank you.

[Operator:]

Thank you. [Operator instructions] And our next question comes from the line of Mike Olson, your line is open.

[Mike Olson:]

Hi good afternoon. So for the cadence of the celebrity games over the next kind of 12 months, it’s basically with Jason Statham in Q4 and is it KD or Kendall and Kylie in Q4 as well?

[Niccolo de Masi:]

Well we haven’t said exactly which one, it will be a female celebrity, it will then be another female celebrity in Q1 and another one in the first half of the year and then you’ve got Nicki Minaj in the middle of 2016. So, approximately speaking you are looking at digesting one every quarter approximately. I think that is sort of a fair spacing as we think about these things, perhaps a little tighter if you have vastly different genres. Whether it is demographic or whether it’s type of game, but we're looking at game engine, we're looking at demographic of core following, we’re also looking of core asset. How new ultimately the demographic is that we’re catering for and whether not there is a sub genre for the partner we were working with, particularly Dominik's. So, ultimately it’s setting us up for exciting Q4 and a very exciting 2016 and I think what I want to press upon you Mike is that we've gone in the last quarter or two from only having Kim six months ago to now having KD, Britney, Kendall and Kylie, Nicki Minaj, Jason Statham, and it’s a very impressive pipeline that we've build for ourselves, which now extends from Q4 right the way into the middle of 2016 if not beyond. And we intend to very much keep driving towards that billion social follower metric we gave ourselves on May 14.

[Mike Olson:]

Okay, that makes sense. And then switching gears a little bit, how are you thinking about this next version of Deer Hunter compared to the prior version like built into your guidance are you assuming it is a similar size game as far as magnitude of revenue in users or how do you think about that?

[Eric Ludwig:]

Yes Mike, this is Eric. I said in my remarks and we’ve said pretty much consistently all year long that none of our titles are remodeling, equivalents or more than the predecessors. So, the celeb games are not being modeled at Kim Kardashian and Hollywood levels, nor are we modeling Deer Hunter 2014 levels for Deer Hunter 2016, we were actually modeling in guidance purposes a discount to that. So if we actually do perform at the same levels, as I said in my prepared remarks, there could still be some upside, there would be some upside of the guidance.

[Mike Olson:]

Okay. Thanks very much.

[Operator:]

Thank you. And our next question comes from Michael Graham, your line is open.

[Michael Graham:]

Thanks. Hi guys thanks. Good job on the performance in the quarter and on all the new celebrities that's great. I have two questions please. One is just looking for a little more color on the guidance, you know, so you effectively have like the beat in Q2 and you’re holding the full-year guidance as you mentioned Eric. And the other thing that looks like is happening is we’re pushing some stuff in the Q4 and there is a pretty steep ramp in Q4. So, I just wonder if you could maybe highlight again just sort of the major drivers there and then I have one more?

[Eric Ludwig:]

Yes sure. We had actually never previously given specific guidance for Q3 and Q4. We had given some shaping, so I know there is what consensus out there for revenue in Q3, Q4 it was a different shape, but some kind of, couple of things that happened we obviously are slipping some titles from early Q3 into the end of Q3 Eternity Warriors four was earlier and we slipped that out, that had an impact for our Q3 revenue guidance. And then obviously if you compare our slides from last quarter and this quarter, we've slipped out three titles out of the year altogether from the fourth quarter, out of the year altogether. So that had an impact to our overall cadence as well. So the combination in our guidance was still able to be held at the midpoint, so we lower 5 billion of the top end and added 5 to the bottom and tightened the range as well as kept the mid-point despite the delays and despite the slips. And then in addition to that, I talked through in my prepared remarks that we added some OpEx. One was the featured investment in the new team up in Portland and [indiscernible] express resource management team that we are very excited about and then two other things that were part of the incremental OpEx as well. One was, we are shifting products around certain studio bonus plants that we are not in the money before, now we are in the money and that had an impact of a couple of million dollars. And then lastly, we added about $2.5 million on top-ex for variable marketing. So it was really a combination of the slips of revenue with the incremental OpEx, but I think it’s important to note that Niccolo did talk about in his prepared remarks that the slips are not absolute losses of revenue, it’s pushing things into 2016 as well. So we will now have three celebrities in first call it between now and summer of next year in 2016 from celebrities. So this will be a corollary benefit to 2016 but accumulated cost of an impact to 2015.

[Michael Graham:]

Okay, that’s helpful. Thanks. And then just on the topic of the celebrity so to spacing, we have talked in the past about the possibility or the risk of self cannibalization especially with the female celebrity games and is that part of the reason that you are sort of spacing them out and if that’s the case, it seems like maybe that’s a bit of a change in philosophy or understanding? And I am wondering what it is that you saw is it something in sort of examining the social media followers and the overlap or something else that led you to believe that okay may be it is better to space out the female celebrity games a little more than we had originally planned or is that even totally off base.

[Niccolo de Masi:]

Look, as I said a couple of minutes ago, the reality is we think we have – effectively have successful proprietary technique for looking at engagement levels, activity levels, trajectory of call it growth and social followings to be able to pick who we work with. We’ve obviously been pleasantly surprised at the pace of execution of our partnership pipeline. What I will point out is all of these deals are exclusive, there are also multiyear and some of them run as far as eight years with extension. And so it’s unavoidable that there is going to be number of games if not many games in markets. In a lot of ways, Glu is on track to become the universal music of gaming if you can call with that because we’re obviously so successful with building out the pipeline here and we are the trusted partner for celebrities to work within the interactive space. We are expanding from obviously female music into male action and we’re continuing as I’ve said in the last six months to look at who we can work with, with what engine and with what social following, most importantly what social following trajectory. So really giving someone a bit of a wider launch window, we do think it makes sense in a number of cases. At the same time, Glu also has a big portfolio and so I wouldn’t read into the spacing here or anything more on the cannibalization front given that Glu has a double digit number games we launch every year and so inevitably there is internal marketing spacing has to happen, not just within the celebrity space particularly in busy periods like the holidays. Last thing I will say on this is, we think that there is obviously room for all of these games or wouldn’t be signing them up in the same period. And the reason I think there is room for all of them is we are signing up some of if not many of, the most popular people in the world and really the most popular musicians in the world in a lot of ways if you look at a ranking of super 100 million social followers and how well they we are plying effective execution against that. And I think that just like you’ve seen many musicians and accuracy part of the same time, the games we part of the same time. There is room on people’s device for dozens of games out etc and it’s proven that people will play more than one even if it’s in the same order. So we are optimistic about the long term annuity affects of each of these being effectively a service as opposed to a single game. This is not a package girl that’s going to go out and make all this money in a month or a quarter. These are all being thought as multiyear past decade or sometimes longer services. And to that extent, we very much believe there is room for differentiation if you take as a product not only what the engine is, but what the demographic is and the [indiscernible] and apply effectively. Combinatorial after three of those effects, you come up with plenty of room in the marketplace. And the beautiful thing about our partnerships is that we are effectively building our own permanent marketing assets so we are not reliant on Apple, we are on relied on Google, we are not relied on UA. The reason we are working with people that have a 100 million social followers is they can effectively generate their own awareness B2C. And we think that builds a lot more stability to Glu’s business long term.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from Mitch Bartlett. Sir, your line is open.

[George Kelly:]

Hi guys. This is George Kelly on for Mitch. Couple of questions. First I think you said on the call that James Bond when that launches, it will be a slower ramp and it will peak in 2016. I’m wondering if I heard that right and I didn’t understand what the reason was for that.

[Niccolo de Masi:]

Sure. You’ve heard that correctly. We have the title out in limited beta release and so part of what we’re updating on today is taking a consideration of the fact that our RPG games typically have high values. They often have I wouldn’t say niche used cases in the case of bond but typically [indiscernible] is definitely a little more let’s call it a hard core in the sense that you are looking for players that want the challenge in the depth. The real time strategy all playing game can bring. That can generate very high values. There are some games in the stores as I mentioned that have $5, even $10 average life time values which are factors of five bigger than the average Glu game. Now that’s a goal that we’ve been working towards for as I said about two years and you will note that Glu has never lost a title yet on the RTS/RPG genre. So we are cautious about moving into genres. As I’ve always said unless we have world-class expertise and in this case we feel we’ve got world-class expertise in the form of some people we’ve hired against but also our IT partners at MGM and EON. And so we believe that this title will be more mass market than other similar genre interactive place on the mobile ecosystem. But we also think that this type of game play will take a period of adjustment for bond [indiscernible] to realize that just like the Broccoli/Wilson family relaunched the bond franchise so to speak with Daniel Craig and they went back to the routes. The flaming novels had talked about greater character depth and talked about ultimately what this franchise had originally been about. We’ve applied the same thought process to the gaming franchise. This is deliberately not a shooter like the last console game was I don’t know half a decade ago or so. This is a bond service again that will sit alongside the movies for many years and it will effectively have its own narrative arc. It has its own characters which are all authentically bonding and it will take undoubtedly little bit of time for I think the bond demographic to realize why we’ve done this, how does this more authentic to the original Fleming vision, why the Broccoli/Wilson family who own, they could have controlled the franchise over the past 50 years have wanted to head in this direction with a partner like Glu. And ultimately I think it will benefit from not only the upcoming bond release for this Q4 but also future movies. So that’s all factored into a long term partnership, it’s been a long term making but also has a long time to run some game launch. That makes sense?

[George Kelly:]

Okay. Yes, it does. And then second question on celebrity games, wondering if any of the new people that you’ve brought on the new client announcements that you’ve made today, is the contracts are a whole lot different and the specific thing I’m wondering is if there is any sort of minimums baked into any other contracts?

[Eric Ludwig:]

Yes, George, this is Eric. So we don’t talk about the specifics of any one specific contract, but we have said that these celebrity contracts do generally have some kind of a minimum guarantee but all of our minimum guarantee, but all of our minimum guarantee is if we do have them and when we do have them that are all recoupable, so as that celebrities revenue comes in and we start to owe them royalties based on whatever royalty is here and rate we have, any prepaid minimum guarantees, the royalties get deducted from minimum guarantees.

[George Kelly:]

Okay and then last question, if may have missed this on the call, but did you guys talk it all about in any kind of partnership with Tencent or anything in the works there beyond their investment?

[Niccolo de Masi:]

No we didn’t talk exclusively about that but I think as I said on the prior call that is obviously part of the thesis of their investment. In a company like Glu or any other portfolio companies, there is opportunities potentially in both directions and you should neither assume that we are near or far from striking a partnership in either direction, other than I would say Tencent, a long term shareholder so we are taking a long term approach to working with them the same way that we are across the rest of our business frankly. So, we are focused since the Analyst Day on building out that five year plan and getting to those 2020 goals. And as I said on every other earnings call, since I been at Glu we are prepared to accept some short-term volatility for long-term big wins as we’ve delivered the last five years and as we very much believe and intend to continue delivery into the next five years.

[George Kelly:]

Great, thank you.

[Operator:]

I am showing no further questions in the queue, I would like to now turn the call back over to management for any closing remarks.

[Niccolo de Masi:]

I wanted to close by thanking my colleagues for their efforts and our stockholders for their continued support. We are pleased with the solid Q2 delivered ahead of guidance and continued momentum of our Hollywood platform. We remain bullish on the long-term growth targets and model outlined at our May 14, 2015 Analyst Day. Thank you again for joining the call.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program, you may all disconnect. Everyone have a great day.