Glu Mobile Inc
Q1 2008 Earnings Call Transcript

Published: 13 May 2008

[Operator:]

Good morning my name is Stephanie and I will be your conference coordinator. Today's call is being recorded. At this time, I would like to welcome everyone to the Glu Mobile's First Quarter 2008 Earnings Results Conference Call. All lines have been placed on mute. After the speaker's remarks, there will be a question-and-answer period. Ms. Bosinoff will begin the call. Please go ahead.

[Stacie Bosinoff:]

Good afternoon everyone and thank you for joining us on the Glu Mobile's first quarter 2008 financial results conference call. This is Stacie Bosinoff from the Blueshirt Group. On the call today, we have CEO, Greg Ballard; and Interim CFO, Eric Ludwig; Jill Braff, Senior VP of Global Publishing will also be available on the question-and-answer session. Before turning the call over to the company, I would like to advise you that. During the course of this call, we will make forward-looking statements regarding future events and the future financial performance of the company. Generally, these statements are identified by use of the words such as expect, believe, anticipate, intend, and other words that denote future events. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. 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 this conference call. These risk factors are described in our press release and are more fully detailed under the caption “Risk Factors” in the Form 10-Q filed with the Securities and Exchange Commission on March 31st, 2008. During this call, we will present both GAAP and non-GAAP financial measures. Non-GAAP measures that exclude acquired in-process technology, dividends, amortization of intangibles, restructuring charges and impairment of investments and option rate securities, gain on sale of assets and stock-based compensation expenses. These non-GAAP measures are not intended to be considered in isolation firm, 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 a quantitative reconciliation of those figures, please refer to today's press release regarding our first quarter and certain non-GAAP financial information available in the investor relations section on our website, www.glu.com. The press release also has been furnished to the SEC as part of the Form 8-K. In addition, please note the date of this conference call is May 13, 2008 and any forward-looking statements that we 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. Lastly, this conference call is the property of Glu Mobile and any recording, reproduction or rebroadcast of this conference call without the expressed written permission of Glu is strictly prohibited. With that, I will turn the call over to the company. Greg?

[Greg Ballard:]

Thanks, Stacie, and thanks to all of you on the line for joining us on the call. I am pleased to report that we had a strong start to the year, with both revenue and non-GAAP EPS coming in ahead of even our even revised guidance. Revenue for the quarter was $20.6 million an increase of 31% over the first quarter last year and also a sequentially increase of 14% over the fourth quarter of 2007. On a GAAP basis our net loss for the first quarter was $6 million or a loss of $0.21 per basic share. We reported a non-GAAP loss of $42, 000 or breakeven per basic share. As Eric will discuss latter, we've raised our full year guidance as a result of our better than expected results this quarter. In the next few minutes there are three key themes that I want to explain in more detail

[Eric Ludwig:]

Great. Thank you, Greg. As Greg mentioned, our first quarter revenue finished above our guidance at $20.6 million, a sequential increase of 14% compared to $18.1 million last quarter and a 31% increase over $15.7 million in the first quarter of 2007. Revenue growth was driven by several factors, including increased revenue from new titles, our continuing catalog strength, broader distribution in all parts of the world and an incremental contribution from MIG and Superscape. In the quarter, MIG and Superscape contributed approximately $2.7 million. Reviewing some of the specific revenue metrics, our top 10 titles represented 43% of revenue, down from 52% in the fourth quarter of 2007, and 57% in the first quarter a year ago. The average revenue per top 10 titles was $886,000 in the quarter, that's roughly flat from the first quarter last year and a 7% sequential decline from the fourth quarter of 2007. Our breadth of titles is reflected in our revenue mix this quarter as no title represented 10% of revenue in the first quarter and the largest title represented only 6% of global revenue further highlighting our product diversity. Revenue from Glu original titles in the first quarter of 2008 was 20% of total revenue, an increase from the 11% in the fourth quarter of 2007. This is largely driven by the addition of the MIG and Superscape titles which are largely original IP. In absolute dollars, revenue from original IP more than doubled over the fourth quarter of 2007 and grew 81% year-over-year. Revenue from new titles represented 45% of revenue in the first quarter of 2008 compared to 52% in the first quarter last year, and 43% in the fourth quarter of 2007. In absolute dollars, revenue from new titles grew 13% over the first quarter last year and 19% sequentially over the fourth quarter of 2007. Our top four carriers represented approximately 47% of revenue in the first quarter of 2008 compared to 47% in the first quarter of 2007. Notably, China Mobile is now one of our top four carriers. By geography, revenue for the first quarter of 2008 was 51% in North America, 30% in EMEA and 19% in the rest of the world. Royalties in the current quarter were $5.5 million, which represented 26.7% of revenue compared to 28.2% of revenue in the fourth quarter of 2007 and 27.3% in the first quarter of last year. Gross margin was 65.1%, which is down from 68.4% last quarter primarily due to a 1.1% increase from the inclusion of a full quarter of MIG amortization and three weeks of amortization from Superscape. When excluding the amortization and impairment of intangibles, gross margin was 73.4% in the first quarter, which was improved from last quarter of 71.8% and higher than 72.7% in the first quarter of 2007. This increase in gross margin is directly related to the increased contribution from original IP. Moving on to the rest of the income statement for the quarter; and please note that my comments on expenses are exclusive of stock-based comp, amortization of intangibles, the IPR&D, restructuring and traditional expenses which I will address separately. Operating expenses in the first quarter of 2008 were $14.9 million, a sequential increase of 11% from the fourth quarter of 2007, and an increase of 33% from the first quarter of 2007 reflecting the expansion of our business and the added cost from MIG and three weeks of Superscape. R&D was $6.4 million or 31% of revenue. Sales and marketing expense was $3.8 million or 19% of revenue. G&A was $4.6 million or 23% of revenue for the quarter. Stock-based compensation was $2 million in the current quarter as well. In the first quarter of 2008 we also recorded a $1 million charge related to acquired in-process research and developments related to our acquisition of Superscape. $622,000 of earnout expenses related to the MIG acquisition, $241,000 of transitional expenses, a $75,000 restructuring charge and a charge for amortization of intangibles of $68,000. The company had an operating loss on a GAAP basis in the quarter of approximately $5.5 million. We recorded $517,000 of net interest income in the quarter and $326,000 of foreign currency exchange gains. Keep in mind that starting in Q2 given the decreased cash balance and the lower interest rate environment you should model approximately $150,000 of interest income per quarter. Included in the net other income line item on the income statement, we recorded an impairment related to investments in auction rate securities. As we mentioned last quarter, the company has two auction rate security investments totaling $2.8 million in face value, which failed at auction starting in August 2007 and which have continued to fail. These auction rate securities continue to pay interest according to the stated terms. However, we've concluded these two securities have suffered a decline in value and we have recorded $235,000 realized loss in our results for the first quarter of 2008. We will continue to assess the caring value of the securities each quarter and should they continue to fail at auction and a further decline in value, we may take additional impairment charges. That being said, given our existing cash liquidity we have no need or plans to liquidity these securities at less than par. Our net tax expense for the quarter was $1.1 million and consisted of $529,000 of foreign withholding taxes and $601,000 of income taxes. Our GAAP net loss for the quarter was $6 million over a loss of $0.21 per basic share. Non-GAAP net loss, which excludes amortization of intangibles stock-based compensation and big earnout expense, restructuring, impairment of auction rate securities, transitional expenses and IP R&D was a loss of $42,000 or break even per basic share. Let me now turn to the balance sheet, cash, short-term investments and marketable securities were $31.3 million as of March 31, 2008 compared to $59.8 million at the end of December. In the first quarter of 2008 the company generated approximately $1 million from operations. On top of that we used $26.7 million related to the acquisition of Superscape, $700,000 of additional deal cost from MIG and $2.3 million of CapEx mostly related to moving our corporate headquarters in March. Accounts receivable at the end of the quarter was $22.8 million versus $15.5 million a year ago and up from $18.4 million at the end of the fourth quarter 2007. Turning now to guidance, for the second quarter of 2008. We currently expect revenue to be in the range of $23.5 million to $24 million. Gross margin excluding amortization, is estimated to be approximately 74%, income taxes are expected to be between $700,000 and $900,000. Non-GAAP net loss is expected to be between a loss of $400,000 and breakeven or a loss of $0.01 to breakeven per basic share. Which excludes $3.2 million for amortization of intangibles, approximately $2.7 million of anticipated stock-based compensation and MIG earnout expense and approximately $650,000 of anticipated restructuring and transitional expenses. GAAP net loss is expected to be between $6.5 million and $7 million or a loss of $0.22 and $0.24 per basic share. Weighted average common shares outstanding for the second quarter of 2008 are expected to be approximately $29.5 million basic and $30.5 million diluted. As you build your models, remember that the second quarter results will have a full quarter of expenses for Superscape as compared to three weeks in the first quarter of 2008. For the full-year, we are raising our revenue guidance to a range of $96.5 million to $100 million. With a Non-GAAP net income range of $5.9 million to $7 million or $0.19 to $0.23 per diluted share. On a GAAP basis we expect EPS for the full year to range from a loss of $0.61 to a loss of $0.65 per basic share. A couple extra notes for your model, when you incorporate the fully anticipated cash outlays for Superscape and MIG, and CapEx offset by our cash generated by operations, we currently anticipate ending the year with $29 million to $31 million in cash and short-term investments. Additionally, your model should include for the full year 2008 approximately $11.5 million in amortization of intangibles, $11.2 million of stock based compensation and MIG earnout expense, $1 million acquired in-process research and development, $1.1 million of combined restructuring and transitional expenses and $235,000 of auction rate security impairments. With that we will open up for questions.

[Operator:]

(Operator Instructions) Your first question comes from the line of Amir Rozwadowski from Lehman Brothers.

[Amir Rozwadowski:]

Good morning folks.

[Greg Ballard:]

Good Morning.

[Amir Rozwadowski:]

I wanted to ask a quick question on some of the title launches Greg; in particular, I wanted to get a sense around some of your studio releases, and sort of your expectations baked into to the guidance right now. I believe we discussed in the past that, potential challenges at the box office could hinder a games success and I wanted to see sort of what you are baking in for Speed Racer at the moment?

[Greg Ballard:]

Hi Amir. That's a good question and a reasonable question. Our expectations for Speed Racer from the beginning is that it was going to be a solid performer along the lines of some of the movies that we have seen in the past that certainly would have a producing a fair amount of revenue in the Q2, Q3 time frame. It's still a little early to say how the title is performing, since we just launched it ourselves and obviously the box office performance in the weekend was not, what everybody expected Speed Racer to do. So, we are watching it closely. We will remain to see what happens with the title. We are actually pretty confident the title though, even apart from the movie title, if you recall Speed Racer has a brand of it's own, and much like some of the brands that we have seen on the decks before that signify or communicate to consumers that there is something other than just the movie. So, Speed Racer is obviously a racing game as well as a movie game. We expect it will do well even if the box office ends up being a little bit less stellar than we original plan. So, we will keep close eye on it and see how it develops.

[Amir Rozwadowski:]

Is there a chance that some of the co-marketing or co-branding initiatives that you and working on could be impacted by that, I mean, we are just trying to get a sense how that could impact?

[Greg Ballard:]

No, I actually think that those are pretty much locked and delivered. As a matter of fact, it's worth saying that I think I said in the last conference call, that one of the things that we think about these movies is that we get better at them each time we do them. And the execution around Speed Racer has clearly in my mind, been the best execution we have ever brought to a movie title, and I step up and say I think it's probably the best execution anybody in the business has brought to the marketing of a movie title. So, those problems are locked and loaded well in advance of whatever happens at the box office. I don't think it will affect the marketing of the game at all. And I think it remains to be seen how the movie will turn out. I mean, I think still very early to be drawing too many conclusions.

[Amir Rozwadowski:]

Great, that's very helpful, Greg and then I just wanted to touch upon your gross margins, I mean certainly we've seen healthy gross margins this quarter and your guidance suggest that continuation of that on next quarter, wanted to sort of understand where you see sort of base line trajectory on gross margins, given the contribution from MIG and then some of the additional a regional IP mix to your business?

[Greg Ballard:]

Yes, a good question. We have Eric take that one.

[Eric Ludwig:]

Sure, Amir. Thanks for the question. So, as we got it in Q2, gross margin of 74% and I think that's a good guidance for the full year with the increase contribution of MIG as well as our back cap release slight of both branded and original IP, so for the full year that's a good consisting guidance.

[Amir Rozwadowski:]

Great, that's very helpful. Thank you very much, guys.

[Operator:]

Your next question comes from the line of Mark Wienkes with Goldman Sachs.

[Mark Wienkes:]

Great, thank you. Nintendo's DS portable continues to be at phenomena on mobile gaming. I guess this is more of the smart phones out there enabled touch screen interfaces. How close do you think these smart phone game quality and experience can get to the type of experience that you see on the DS?

[Greg Ballard:]

I think its going to be very close. In technologically it's going to be right on top of it. I think its going to be to a large extent up to publishers and developers to find out how much we can do with these new platforms. In my mind a year from now people won't be talking about the DS and the let's say iPhone or Android experiences being substantially different from each other. They will be talking about the fact that different group of people is playing games that are playing DS. I mean, last time I checked my wife isn't carrying around a DS, but she does have an iPhone. So, I think that the experience is going to be very, very close, but the ubiquity of that platform is going to be transformative.

[Mark Wienkes:]

To offer more opportunities for Glu to port the titles to the DS or across platform?

[Greg Ballard:]

It certainly does, it's something, obviously, that we've been looking at internally, Mark. I mean, one of the hesitations that we have to expanding that has literally been the sudden opportunity that we have with these other platforms. So, we were -- and there was no hit a (inaudible), we were talking about the expanding last year in to some of these other platforms and then along came the iPhone, the Android, the Sidekick, N-Gage and Blackberry and we suddenly realized that we have plenty of opportunities within a closer proximity to our expertise to focus on. The downside to us expanding too rapidly in to PSP and DS, is that the business model is quite different, conceivably get us into the world of physical goods, which we think as a model that is interesting, but has its own drawbacks and downfall. So, we're actually pretty pleased that in the intermediate terms that there is a whole set of platform that sort of presented themselves that make the DS and PSP a little bit less compelling they might have been even six months ago.

[Mark Wienkes:]

And the final question, other implications with respect to your competitive advantage in the porting technology, vis-à-vis that competitors ability maybe catch up?

[Greg Ballard:]

Well, I think there is certainly going to be a different set of competitive advantages that emerge on some of these new platforms, first I think it's important to realize that the base business Java, BREW all the other platforms that exist out there will continue to be as complex as ever been before. And we believe that the title that will do best on the newer platforms will emerge from the other mobile platforms, because they will get a certain branding momentum there. And so there are certain disadvantages or change in the advantages that happen as we move in the new platform, but the fact of the matter is most of what we do is about making games worked on a portable environment. So, learning how to use different set of handset controls, learning how to fit on to a smaller screen size, learning how to entertain people in a casual setting in bits and pieces, is much a part of the competitive advantage that we built up, as the porting advantage as well. So, between the base business, which continue to grow and continues to be important, even to create a momentum and the fact a lot of the other expertise we built up, is equally relevant or even more relevant in this new era. We feel pretty confident that we will be able to compete effectively in this new set of platforms as well.

[Mark Wienkes:]

Great, thank you.

[Operator:]

Your next question comes from the line of Tavis McCourt.

[Tavis McCourt:]

Hey, Greg and Eric, nice quarter. I had a few questions. First, I think in the last call you mentioned, Hasbro licensees that sold in the quarter that you were originally anticipating would have about $0.5 million positive impact in Q1? Is that how it turned out roughly?

[Eric Ludwig:]

Tavis, it was a modest amount and that's pretty close to the actuals, correct.

[Tavis McCourt:]

Okay. And then it looks like although obviously regarding for OpEx to be up in Q2 with Superscape. It looks to be a pretty nominal increase. Are you capturing what cost synergies there are pretty much immediately or there are additional synergy opportunities in the back half of the year from the Superscape acquisition?

[Jill Braff:]

I am not sure if it's a nominal increase. We only had three weeks of OpEx in Q1 from Superscape. So, we certainly will have a quarter-over-quarter increase in OpEx due to Superscape. That being said, we also will be seeing synergies bleeding out throughout the rest of the year as the transition expenses and the integrations from the full provision.

[Tavis McCourt:]

And then on MIG, your original guidance was pretty modest contribution, obviously it looks like -- it make out a great quarter in this quarter. Was there something specific in terms of new games or new promotional activity by China mobile that cause that or have you gotten in there and just sound out that there maybe more revenue potential there than you may have thought initially?

[Eric Ludwig:]

Yeah, we definitely had a really good quarter at MIG and it definitely exceeded our expectations. We're not really what it declare permanent upside that the numbers for a couple of reasons. First, the weather of a Chinese New Year was unseasonably cold and we don't know whether that had a disproportion benefit Q1 purchases, on a prospected basis, we're not sure how the Olympics will impact consumer purchasing. And lastly, China mobile does not have subscription pricing and this makes forecasting a bit more difficult. So, until we really see a true trend in China we are cautious about really declare a full recurring upside to the MIG numbers.

[Tavis McCourt:]

Got you and then, I guess, on the new platform conversation Greg, obviously the upside is these are clearly much better gaming devices than traditional Flip Phones or Candybar Phones. Can you talk about the operating expense impact up, in another words, will you have to ramp up expenses or is there different types of talent you need for development on those games, might you need to make some tuck-in acquisitions somehow that that's had some experience developing on those platforms or do you think that you can do internally?

[Greg Ballard:]

Well, I think we can do everything internally. We don't see the need to go up and acquire anybody for that particular purpose. As a matter of fact I'd say that, the people on our studio, they're exceptionally excited about the opportunity to expand the levels and the depth of the game play that we have. Is likely going to change somewhat the amount of money that we have to spend on titles, probably we won't see the impact of that until '09 when there is corresponding offset or hopefully more than a corresponding offset in revenue. But it's clear that these devices will require games that are just more complex and deeper. So that means more work per game, that means more levels per game, and undoubtedly will mean more months per game. And we have started incorporating that into our studio plans and calendars for '09. It will certainly be part of our outlook for '09, but on balance, we think it is a great development for us and for the industry.

[Tavis McCourt:]

Great. And can you give us an update on, just a follow-up on, China Mobile where they are in kind of creating a gaming platform. I know when you purchased MIG you talked about it being a pretty immature market over there for Java and BREW games. Can you give us an update on kind of, where China Mobile is in trying to grow that market?

[Greg Ballard:]

Well, again as Eric said, it's a little early for us to declare victory over there, but one of the things motivated us to do this acquisition when we did was our fundamental belief that China Mobile had changed there own operations and orientations towards games. We like everybody else and venture backed business a couple of years ago looked very closely at China and spent a lot of time over there as did a lot of our Board members and we kept coming back and our conclusion was that the infrastructure that China Mobile was using was still unreliable and made for a relatively miserable if you will, gaming experience. But then when we went back over towards the end of last year, China Mobile had in fact rolled out a new platform. And that platform was not only stable, but it allowed for a merchandising experience that was on par with any of the other mobile operators that we had seen, and we decided at that point that the time was right to start looking more closely at China. Everything that we've seen about the platform since then suggests that in fact it is stable, that it is allowing people to buy games and importantly, consumers in China may be coming back to try a second time or a third time, I mean before that experience had not been an acceptable experience. And so there is a lot of optimism internally that in fact China Mobile is focused on this area, that they have a platform that will sustain growth in that area. But again we've only had one quarter of experience. There are some things going on in China including incredibly cold weather that kept people indoors playing mobile games that make it little bit difficult to project going forward but we in the quarter are certainly more optimistic than not.

[Tavis McCourt:]

Great. Thanks a lot.

[Operator:]

Your next question comes from the line of Brian Pitz with Banc of America Securities.

[Kaizad Gotla:]

Thank, Hi this is actually Kaizad in for Brian Pitz. Couple of questions; could you just, a follow-up from the previous question. Could you give us some sense of the size of the China market from your perspective and maybe some market share figures as well? And then separately, how should we think about the European market going forward. I think in the past you mentioned Europe was a little more unpredictable and could potentially be challenging for some period of time. Thanks.

[Greg Ballard:]

Sure. Let me be a little bit cautious about describing in too much detail the China market, because you know it is, as you can image a difficult one to access just as all of our markets right now are difficult to measure. There aren't a lot of external data sources. China Mobile has not obviously shared the revenue figures with the world as a whole. Our estimate though internally is that the China market is probably somewhere in $40 million to [$60 million] range at retail. Again, that's a really rough estimate of how big the market is. One way of thinking about that is, it may be roughly the same size as the South American market is, which we also think is roughly in that range. We know that we are number one, because we have been told that and we have nobody else who are publicly reporting numbers that are as big as ours, so we assume that we are number one, but we don't know what our market share is other than sort of extrapolating from our performance there. As far as, Europe is concerned, again, it's still relatively early after the fluctuation that we had last year to draw, a long fast conclusion about it, but we feel like the market has stabilized. The changes that were made to platforms that took place in the summer last year appear to have settled down and in fact the operators now are back to selling games whole heartedly. Our management team has really jelled over there since the changes we made towards the end of last year, we feel like they are executing extremely well. As I said in my prepared remarks, we have a couple of new sales people in some of our key territories. We think those folks are going to really bring strong results to their territory. So in general, we are feeling much better about the European market. It is still a challenging market it is fragmented, it's inconsistent, so one region will do well and one timeframe and then the next timeframe it won't, that's one of the reasons why early on we wanted to be not only trans European, we wanted to be global, because at any one time in our quarter, we are going to have a region that's performing better than other regions and the more regions that we are in and the more titles that we have out there, the more diversity that we have, and the more we protect ourselves against down fall in any one region. So, we feel very good about, where we are with Europe right now. But, we also feel very good that we have a lot of regions that are humming right now across the world.

[Kaizad Gotla:]

Great. Thanks very much.

[Operator:]

Your next question comes from the line of Seth Potter with Merriman Curhan Ford.

[Seth Potter:]

A few follow ups on the gross margin discussion. Can we assume that original IP will be about 20% of revenues? Also in regards to just up front payments, in competition for titles it would be great to hear more detail on that, in the current environment. And then finally in regards to M&A, I was wondering if you are seeing multiples coming given the current markets? Thanks.

[Greg Ballard:]

Seth let me have Eric to answer the first one, then I will take the licensing and M&A question.

[Eric Ludwig:]

Sure Seth, so then on the original IP we did come in at 20% for this quarter and for the rest of the balance of this year we are anticipating that being, anywhere from 18% to 20%, so high teens though right at the 20% market.

[Greg Ballard:]

As far as licensing is concerned. I know there have been some speculations, we talked about this a little bit in the last conference call. The licensing expenses have been going up and we went back and looked at our own internal deals that we have done and we found no evidence at all, that our own internal licensing costs have gone up as a matter of fact. One can make the argument depending upon how you count, that our licensing costs have actually gone down a little bit in the last year. Our dollars that we spend and what we call advances, in other words we make a certain guarantee to a licensor, that we are going to deliver X number of dollars over the course of the license. Some percentage of that is sometimes requested up front, so called advances. The amount of money that we are paying for advances right now does not differ materially from what we have paid in the past on a calculated forecasted basis. What has changed of course is that when we sit down to negotiate with a licensor, the amount of money that we can deliver to that licensor had in fact gone up. If you look back on what an average hit title delivers today versus what it delivered two years ago, obviously that number is higher. So when we develop a guarantee model or an advanced model for a licensor, we have obviously more money than we can pay in a guarantee, because we know we are going to produce more royalties for them. So in that sense the numbers have gone up but the amount of risk involved, the percentage that we are paying as a percentage of our forecasted royalty in fact has not changed. So we feel like the licensing economic world in fact is quite stable right now, and we are seeing a lot of different opportunities out there and we are pursuing them aggressively and feel very good about our prospects to continue lending good and affordable licenses. As far as M&A, I think we were pretty clear that we are in a little bit of a holiday. We are focused on integrating both MIG and Superscape. Our practice whether by a plan or by [hairpin stand] has been to do about one transaction a year. In fact we did two this past year, so it has taken us a little bit of time to digest those. We feel very good about where we are in the integration process, but we are not out actively beating the bushes. So it'd be premature for me to, at this point have a real view about where peoples expectations and multiples are. I suspect that they are probably about where they were at the end of last year which is in the mobile business. People are recognizing that if you are not in the top three, you probably need to be thinking about what's your strategic plan is going forward. Outside the mobile business there are a whole lot of comparable that those guys can point to. So, whatever expectations they have are probably not necessarily market based, the more, where they feel like they are in terms of there own ability to stay independent versus merger somebody. So, it remains to be seen, and we will see where it goes.

[Seth Potter:]

Thanks, just a couple of follow-ups. Are you benefiting from the carriers calling of the publishing group as you talk about on prior quarters, did that have an effect this quarter and also I don't know if you can give percentages in terms of what carrier accounted for as a percentage during the quarter and what was your highest percentage carrier as related to revenues? Thanks.

[Eric Ludwig:]

Seth could you repeat the first question, I am not sure I quite got it.

[Seth Potter:]

You talked about the carriers calling down their lists of publishers that they are promoting on their decks. And I was wondering if you saw that was a big part of the up-tick you saw and then say North America this quarter.

[Greg Ballard:]

Fair enough. I don't think it was, I don't think it was material in the first quarter, we are certainly seeing some scrambling taking place right now in North America and even elsewhere, where some of the smaller publishers trying to find a home for their titles. The fact of the matter is, a lot of the titles that those publishers had may still get published, but they maybe finding homes with other people, aggregators, distributors etc, what will happen I think is some of the weaker titles will probably be flushed out. I think it still remains to be seen what impact that will have in terms of dollars over the next couple of quarters. It is difficult to project and as far as the other question Eric, you want to

[Eric Ludwig:]

Sure. On the carrier concentration, so in the quarter we had our top four carriers were 47% of revenue, which was flat from a year ago. Two carriers were over 10%. Verizon was 20%, which is down two percentage points from a year prior due to the diversity of the revenue and Vodafone actually, globally increased to a 10% customer in the quarter, 10.3% and then the two other carriers rounded out the mix that were slightly it had high single digits. And as we mentioned in my prepared remarks, China Mobile with the strong performance this quarter didn't come into the top half of four carriers this quarter.

[Seth Potter:]

Great, thanks guys.

[Operator:]

Your next question comes from the line of Mark May with Needham and Company.

[Mark May:]

Hi, all of my questions have really been answered other than maybe one housekeeping from modeling purposes. Trying to get a sense of in your guidance for the full year of this year, how much is being contributed by the two acquisitions and then also if you could add in the -- I guess there is a [stuff] contribution from the Hasbro license, just trying to get more of a apples-to-apples pro forma number for this year. Thanks.

[Eric Ludwig:]

Sure, I'll take the first one on the two acquisitions. So, we've got it Superscape on the last conference call of adding $12 million and that still a consistent guidance for the year and MIG we got it $2 million to $3 million in the last conference call. And as I've mentioned in the prepared remarks, with they did exceed expectations this quarter. We are a little cautious about having the models increased that significantly. So, I think those two are pretty consistent. And then from a Hasbro contribution, we don't really talk about any one license or in total, but the incremental that we achieve this quarter above the guidance and expectations of about $500 as [Travis] mentioned.

[Mark May:]

And what would bay go to for the full year from two to three given the upside in the quarter?

[Eric Ludwig:]

The upside is about $1 million.

[Mark May:]

Okay. Thank a lot.

[Eric Ludwig:]

Which is what we added to the top end of the range, so we increased our top end of the range from $99 million to $100 million reflected our performance.

[Mark May:]

Okay. Thanks a lot.

[Operator:]

(Operator Instructions). Your next question comes from the line of Todd Rethemeier with Soleil Securities.

[Todd Rethemeier:]

Thanks. Just wondering, if you can give us a little more color on Superscape's business, they obviously do a lot of business with Verizon and some of the Verizon branded games, what's the length of that contract and then just how meaningful is that to revenue?

[Greg Ballard:]

I have Jill answer that, since that's uniquely in her preview.

[Jill Braff:]

So, yes, Superscape has been working with Verizon on their white label program and Verizon only works with two players in white labels. Superscape now Glu and EI and so obviously its an important program to us to maintain. And it isn't necessarily a contract that has an end period. We continue to maintain that program just as we would with any of our titles with Verizon and then are constantly looking at new games that we can add to the program and would maintain just as we would any of our other best selling titles with Verizon. And in general our relationship with Verizon has continue just as it was before, in fact if anything we just deepened by now having another point of contact that we gained from the Superscape team.

[Todd Rethemeier:]

And are you willing to say ballpark number, what percentage of that business that was?

[Greg Ballard:]

I don't think we've actually ever broken that out probably we resists doing that I think this way.

[Todd Rethemeier:]

If I could I ask anyway. Thanks

[Greg Ballard:]

Yeah, fair enough.

[Operator:]

Thank you ladies and gentleman. This concludes Glu Mobile's first quarter 2008 earnings results conference call. You may now disconnect.