Glu Mobile (GLUU)'s bad times are now probably over. The mobile gaming company was struggling last year but it has executed a remarkable turnaround in the last few months. The company is expected to scale greater heights at the end of 2013, and it received a huge boost when Apple (AAPL) signed a deal with China Mobile to sell iPhones in China. Moreover, Glu plans to bring a whole new experience to gamers with the Google Glass.
Solid Results
It became crystal clear that Glu is making all the right moves when the company reported its fourth quarter results earlier this month. Its revenue increased by 62% from last year, while non-GAAP net income was $5.4 million, against a loss of $3.2 million in the year-ago period. In all Glu beat estimate;s given management's strategies it will continue to outperform going forward.
Growth Ahead
Mobile gaming is a fast-growing market. The worldwide mobile gaming market is expected to become a $22 billion market by the end of next year, up from just $13 billion in 2013 as predicted by Gartner. Therefore, there's huge potential here, which is why there are possibly a large number of gaming companies and independent developers out there looking to capitalize on this opportunity. Hence, there's quite tough competition for Glu, but its addictive games have successfully managed to make a mark.
Glu Mobile is successful only because of a solid portfolio of games. Some of the famous ones are Contract Killer, Frontline Commando, Eternity Warriors and Deer Hunter. Glu Mobile is planning to double the lifetime revenue of the new games released under these franchises going forward, and it has already lined up quite a few releases to achieve this target.
A Strong Gaming Pipeline
This year, Glu is assertively focusing on the action and shooter genres. Shooter games are not that famous on smartphones and tablets as on their console counterparts, but Glu believes this trend will change in the future. Going forward it is planning to make the most of the expected increase in the popularity of shooter games on mobile devices through its robust games and an efficient gaming platform.
The hugely famous and popular Deer Hunter 2014 and Eternity Warriors 3 are expected to earn double of what their predecessors made, assisted by Glu's focus on making noticeable improvements in gameplay, social features and the implementation of games-as-a-service (GaaS).
The company plans to gradually integrate its GaaS platform, GluOn, into more titles after its success with Eternity Warriors 3. This platform assists Glu in providing a stable server platform coupled with various interactive features to make gameplay more engaging. The recent launch of Motocross Meltdown is also being supported by GluOn that increases the company's chances of seeing better performance from the title.
The introduction of new products by Google an Apple into the market also enables Glu to capture new markets. For example, Glu must benefit from Apple's deal with China Mobile with around three-fifths of revenue coming from Apple's iOS store.
Analysts expect Apple to sell around 24 million more iPhones this year through the Chinese telecom giant, that should definitely expand its addressable market.
In addition, Glu is exploring new markets by launching a game for Google Glass, known as Spellista, last year. This shows for sure the keen commitment of Glu towards newer opportunities. The company has brought its existing expertise such as peer-to-peer messaging and voice tutorials to enhance the gaming experience.
Conclusion
The gaming market is expanding rapidly and Glu is one of the leading mobile game developers sitting there to pounce upon this opportunity with a wide range of games and innovations. Its games have found good footing on different platforms such as Android and iOS. This makes Glu confident for witnessing solid growth from its new games, and going forward this should translate into further share price gains.
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