Glu Reports Fourth Quarter and Full Year 2012 Financial Results

  Glu Reports Fourth Quarter and Full Year 2012 Financial Results

  *112% GAAP and 78% non-GAAP smartphone revenue growth for the full year
    2012
  *Original IP expansion drove GAAP gross margins of 85% and non-GAAP gross
    margins of 90% for the full year 2012 compared to 72% and 82%,
    respectively, last year

Business Wire

SAN FRANCISCO -- February 5, 2013

Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and publisher of
freemium games for smartphone and tablet devices, today announced financial
results for its fourth quarter and full year ended December 31, 2012.

“The fourth quarter came in at the high end of expectations across our key
metrics,” stated Niccolo de Masi, Chief Executive Officer of Glu. “Consistent
with our guidance, smartphone revenue was flat compared to Q3 due to the
decision to delay the global launch of approximately half of our Q4 2012
titles. We anticipate seeing momentum accelerate as new titles launch
incorporating our new monetization systems.”

De Masi continued, “Looking forward, we believe Glu is strongly positioned to
lead in a Social Gaming 2.0 landscape. We will continue to deliver engaging
core gameplay, industry leading production values, and outstanding global
reach. Our new product roadmap emphasizes deeper and more immersive gameplay
designed to drive higher monetization and lifetime value. Every game we
release in 2013 is designed to have the potential to outperform our best
titles of years past.”

Fourth Quarter 2012 Financial Highlights:

  *Revenue: Total GAAP revenue was $21.0 million in the fourth quarter of
    2012 compared to $15.2 million in the fourth quarter of 2011. Total
    non-GAAP revenue was $20.8 million in the fourth quarter of 2012 compared
    to $20.1 million in the fourth quarter of 2011. Non-GAAP revenue excludes
    changes in deferred revenue and amortization of in-process development
    contracts.
  *Gross Margin: GAAP gross margin was 85% in the fourth quarter of 2012
    compared to 73% in the fourth quarter of 2011. Non-GAAP gross margin was
    90% in the fourth quarter of 2012 compared to 87% in the fourth quarter of
    2011. Non-GAAP gross margin excludes changes in deferred revenue and
    royalties and amortization of intangible assets.
  *GAAP Operating Loss: GAAP operating loss was $(6.7) million in the fourth
    quarter of 2012 compared to a $(9.8) million loss in the fourth quarter of
    2011.
  *Non-GAAP Operating Loss: Non-GAAP operating loss was $(2.5) million in the
    fourth quarter of 2012 compared to a loss of $(1.2) million during the
    fourth quarter of 2011. Non-GAAP operating loss excludes changes in
    deferred revenue and royalty expense, amortization of in-process
    development contracts, stock-based compensation expense, amortization of
    intangible assets, restructuring charges, change in fair value of the
    Blammo earnout, transitional costs and impairment of goodwill.
  *Adjusted EBITDA: Adjusted EBITDA was a $(1.8) million loss for the fourth
    quarter of 2012 compared to a $(0.7) million loss during the fourth
    quarter of 2011. Adjusted EBITDA is defined as non-GAAP operating
    income/(loss) less depreciation.
  *GAAP Net Loss and EPS: GAAP net loss  was $(7.1) million for the fourth
    quarter of 2012 compared to a GAAP net loss of $(10.0) million for the
    fourth quarter of 2011. GAAP EPS was a loss of $(0.11) for the fourth
    quarter of 2012, based on 65.7 million weighted-average basic shares
    outstanding, compared to a loss of $(0.16) for the fourth quarter of 2011,
    based on 63.0 million weighted-average basic shares outstanding.
  *Non-GAAP Net Loss and EPS: Non-GAAP net loss was $(3.2) million for the
    fourth quarter of 2012 compared to a loss of $(1.4) million for the fourth
    quarter of 2011. Non-GAAP EPS was a loss of $(0.05) for the fourth quarter
    of 2012 based on 65.7 million weighted-average basic shares outstanding,
    compared to a loss of $(0.02) for the fourth quarter of 2011 based on 63.0
    million weighted-average basic shares outstanding.
  *Cash Flows Used in Operations: Cash flows used in operations were $(1.6)
    million for the fourth quarter of 2012 compared to cash flows used in
    operations of $(4.3) million for the fourth quarter of 2011.

Selected Fourth Quarter and Full Year 2012 Operating Highlights and Metrics:

  *Our total GAAP smartphone revenue for the fourth quarter of 2012 of $18.6
    million grew 85% from the fourth quarter of 2011 and comprised 89% of
    total GAAP revenue.
  *Our total GAAP smartphone revenue for 2012 of $74.4 million grew 112% from
    2011 and was 85% of total GAAP revenue.
  *Our non-GAAP smartphone revenue for the fourth quarter of 2012 of $18.5
    million grew 24% from the fourth quarter of 2011 and was 89% of total
    non-GAAP revenue.
  *Our non-GAAP smartphone revenue for 2012 of $74.6 million grew 78% from
    2011 and was 85% of total non-GAAP revenue.

Fourth Quarter and Recent Developments and Strategic Initiatives:

  *We launched four new freemium games: Death Dome, Contract Killer 2, Dragon
    Slayer, and Contract Killer Zombies 2.
  *We announced the availability of our leading freemium titles for Google’s
    new Nexus devices and Android 4.2, Jelly Bean.
  *We announced the availability of Deer Hunter Reloaded, Small Street and
    Samurai vs. Zombies Defense for the Mac, all of which are fully optimized
    for new features on OS X Mountain Lion including full screen Retina
    display and support for in-app purchasing.
  *We hiredMatthew Ricchettias our President of Studios.
  *We partnered with Probability PLC to expand our mobile portfolio to
    include real-money gambling and reach new international audiences.
  *In January 2013, we invested in Bee Cave Games, a new company formed by
    industry veterans that is focused on developing social and mobile casino
    games.
  *We launched Glu Publishing and hired a VP of 3rd Party Development.

Fiscal 2012 Financial Highlights:

  *Revenue: Total GAAP revenue was $87.5 million for the year ended December
    31, 2012 compared to $66.2 million for the year ended December 31, 2011.
    Total non-GAAP revenue was $87.8 million for the year ended December 31,
    2012 compared to $72.9 million in the year ended December 31, 2011.
    Non-GAAP revenue excludes changes in deferred revenue and amortization of
    in-process development contracts.
  *Gross Margin: GAAP gross margin was 85% for the year ended December 31,
    2012 compared to 72% for the year ended December 31, 2011. Non-GAAP gross
    margin was 90% for the year ended December 31, 2012 compared to 82% for
    the year ended December 31, 2011. Non-GAAP gross margin excludes changes
    in deferred revenue and royalties and amortization of intangible assets.
  *GAAP Operating Loss: GAAP operating loss was $(22.1) million for the year
    ended December 31, 2012 compared to a $(21.2) million loss for the year
    ended December 31, 2011.
  *Non-GAAP Operating Loss: Non-GAAP operating loss was $(4.6) million for
    the year ended December 31, 2012 compared to a loss of $(3.4) million
    during the year ended December 31, 2011. Non-GAAP operating loss excludes
    changes in deferred revenue and royalty expense, amortization of
    in-process development contracts, stock-based compensation expense,
    amortization of intangible assets, restructuring charges, change in fair
    value of the Blammo earnout, transitional costs and impairment of
    goodwill.
  *Adjusted EBITDA: Adjusted EBITDA was a $(2.3) million loss for the year
    ended December 31, 2012 compared to a $(1.5) million loss for the year
    ended December 31, 2011. Adjusted EBITDA is defined as non-GAAP operating
    income/(loss) less depreciation.
  *GAAP Net Loss and EPS: GAAP net loss  was $(20.5) million for the year
    ended December 31, 2012 compared to a GAAP net loss of $(21.1) million for
    the year ended December 31, 2011. GAAP EPS was a loss of $(0.32) for the
    year ended December 31, 2012, based on 64.3 million weighted-average basic
    shares outstanding, compared to a loss of $(0.37) for the year ended
    December 31, 2011, based on 57.5 million weighted-average basic shares
    outstanding.
  *Non-GAAP Net Loss and EPS: Non-GAAP net loss was $(5.1) million for the
    year ended December 31, 2012 compared to a loss of $(4.0) million for the
    year ended December 31, 2011. Non-GAAP EPS was a loss of $(0.08) for the
    year ended December 31, 2012 based on 64.3 million weighted-average basic
    shares outstanding, compared to a loss of $(0.07) for the year ended
    December 31, 2011 based on 57.5 million weighted-average basic shares
    outstanding.
  *Cash Flows Used in Operations: Cash flows used in operations were $(6.7)
    million for the year ended December 31, 2012 compared to cash flows used
    in operations of $(6.7) million for the year ended December 31, 2011.

A reconciliation of GAAP to non-GAAP results has been provided in the
financial statement tables included in this press release. An explanation of
these measures is also included below under the heading “Non-GAAP Financial
Measures.”

“We had a solid fourth quarter performance with non-GAAP smartphone revenue
growing primarily due to the strength of two of our new sequels Contract
Killer 2 and Eternity Warriors 2,” stated Eric R. Ludwig, Glu’s Chief
Financial Officer. “While we expect first quarter results to be impacted by a
combination of seasonality and further delays in title launches, we remain in
position to benefit from increasing monetization trends as we implement our
new strategy. Given our on-going commitment to control costs, we are confident
in our ability to end 2013 with approximately $14 million in cash and without
the need to raise additional capital or incur debt.”

Business Outlook as of February 5, 2013:

The following forward-looking statements reflect expectations as of February
5, 2013. Results may be materially different and are affected by many factors,
such as: consumer demand for mobile entertainment and specifically Glu’s
products; consumer demand for smartphones, tablets and next-generation
platforms; development delays on Glu's products; continued uncertainty in the
global economic environment; competition in the industry; storefront
featuring; smartphone storefronts, carriers and other distributors maintaining
their networks and provisioning systems to enable consumer purchases; changes
in foreign exchange rates; Glu's effective tax rate and other factors detailed
in this release and in Glu's SEC filings.

First Quarter Expectations – Quarter Ending March 31, 2013:

  *Non-GAAP revenue is expected to be between $17.0 million and $18.5 million
    and non-GAAP smartphone revenue is expected to be between $16.0 million
    and $17.0 million.
  *Non-GAAP gross margin is expected to be between 89% and 90%.
  *Non-GAAP operating expenses are expected to be between $20.5 million and
    $20.7 million.
  *Adjusted EBITDA, defined as non-GAAP operating loss excluding depreciation
    of approximately $800,000, is expected to range from $(3.3) million to
    $(4.6) million.
  *Income tax expense is expected to be $(0.2) million.
  *Non-GAAP net loss is expected to be between $(4.3) million and $(5.6)
    million, or a net loss of $(0.06) to $(0.08) per weighted-average basic
    shares outstanding.
  *Weighted-average common shares outstanding are expected to be
    approximately 66.2 million basic and 70.8 million diluted.

2013 Expectations – Full Year Ending December 31, 2013:

  *Non-GAAP revenue is expected to be between $84.0 million and $92.0 million
    and non-GAAP smartphone revenue is expected to be between $80.0 million
    and $88.0 million.
  *Non-GAAP gross margin is expected to be approximately 91.5%.
  *Adjusted EBITDA is expected to range from $(1.8) million to $(7.5)
    million.
  *Non-GAAP net loss is expected to be between $(5.9) million and $(11.6)
    million, or a net loss of $(0.09) to $(0.17) per weighted-average basic
    shares outstanding.
  *Weighted-average common shares outstanding are expected to be
    approximately 67.3 million basic and 73.0 million diluted.
  *We expect to have a cash balance on December 31, 2013 of approximately
    $14.0 million with no debt.

Quarterly Conference Call

Glu will discuss its quarterly results via teleconference today at 1:30 p.m.
Pacific Time (4:30 p.m. Eastern Time). Please dial (877) 593-1988, or if
outside the U.S., (678) 905-9423, with conference ID # 87391968 to access the
conference call at least five minutes prior to the 1:30 p.m. Pacific Time
start time. A live webcast and replay of the call will also be available on
the investor relations portion of the company's website at
www.glu.com/investors. An audio replay will be available between 4:30 p.m.
Pacific Time, February 5, 2013, and 8:59 p.m. Pacific Time, February 12, 2013,
by calling (855) 859-2056, or (404) 537-3406, with conference ID # 87391968.

Use of Non-GAAP Financial Measures

To supplement Glu's unaudited condensed consolidated financial data presented
in accordance with GAAP, Glu uses certain non-GAAP measures of financial
performance. The presentation of these non-GAAP financial measures is not
intended to be considered in isolation from, as a substitute for, or superior
to, the financial information prepared and presented in accordance with GAAP,
and may be different from non-GAAP financial measures used by other companies.
In addition, these non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Glu's results of operations as
determined in accordance with GAAP. The non-GAAP financial measures used by
Glu include historical and estimated non-GAAP revenues, non-GAAP smartphone
revenues, non-GAAP operating expenses, non-GAAP gross margins, non-GAAP
operating income/(loss), non-GAAP net loss and non-GAAP basic and diluted net
loss per share. These non-GAAP financial measures exclude the following items
from Glu's unaudited consolidated statements of operations:

  *Change in deferred revenues and royalties;
  *Amortization of in-process development contracts;
  *Amortization of intangible assets;
  *Stock-based compensation expense;
  *Restructuring charges;
  *Change in fair value of Blammo earnout;
  *Transitional costs;
  *Impairment of goodwill;
  *Release of tax liabilities; and
  *Foreign currency exchange gains and losses primarily related to the
    revaluation of assets and liabilities.

In addition, Glu has included in this release “Adjusted EBITDA” figures which
are used to evaluate Glu’s operating performance and is defined as non-GAAP
operating income/(loss) excluding depreciation.

Glu may consider whether significant non-recurring items that arise in the
future should also be excluded in calculating the non-GAAP financial measures
it uses.

Glu believes that these non-GAAP financial measures, when taken together with
the corresponding GAAP financial measures, provide meaningful supplemental
information regarding Glu's performance by excluding certain items that may
not be indicative of Glu's core business, operating results or future outlook.
Glu's management uses, and believes that investors benefit from referring to,
these non-GAAP financial measures in assessing Glu's operating results, as
well as when planning, forecasting and analyzing future periods. These
non-GAAP financial measures also facilitate comparisons of Glu's performance
to prior periods.

Cautions Regarding Forward-Looking Statements

This news release contains forward-looking statements, including those
regarding our "Business Outlook as of February 5, 2013" ("First Quarter
Expectations – Quarter Ending March 31, 2013" and “2013 Expectations – Full
Year Ending December 31, 2013”) and the statements that: we anticipate seeing
momentum accelerate as new titles launch incorporating our new monetization
systems; we believe Glu is strongly positioned to lead in a Social Gaming 2.0
landscape; we will continue to deliver engaging core gameplay, industry
leading production values, and outstanding global reach; our new product
roadmap is designed to drive higher monetization and lifetime value; every
game we release in 2013 is designed to have the potential to outperform our
best titles of years past; while we expect first quarter results to be
impacted by a combination of seasonality and further delays in title launches,
we remain in position to benefit from increasing monetization trends as we
implement our new strategy; and that we are confident in our ability to end
2013 with approximately $14 million in cash and without the need to raise
additional capital or incur debt. 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. Investors should
consider important risk factors, which include: the risks identified under
"Business Outlook as of February 5, 2013"; the risk that consumer demand for
smartphones, tablets and next-generation platforms does not grow as
significantly as we anticipate or that we will be unable to capitalize on any
such growth; the risk that we do not realize a sufficient return on our
investment with respect to our efforts to develop freemium games for
smartphones, tablets and next-generation platforms, the risk that we will not
be able to maintain our good relationships with Apple and Google; the risk
that our development expenses for games for smartphones, tablets and
next-generation platforms are greater than we anticipate; the risk that our
recently and newly launched games are less popular than anticipated; the risk
that our newly released games will be of a quality less than desired by
reviewers and consumers; the risk that the mobile games market, particularly
with respect to freemium gaming, is smaller than anticipated; and other risks
detailed under the caption "Risk Factors" in our Form 10-Q filed with the
Securities and Exchange Commission on November 9, 2012 and our other SEC
filings. You can locate these reports through our website at
http://www.glu.com/investors. We are under no obligation, and expressly
disclaim any obligation, to update or alter our forward-looking statements
whether as a result of new information, future events or otherwise.

2008 Equity Inducement Plan

In connection with the hiring of our new VP of 3rd Party Development, Glu has
agreed that its Compensation Committee will award our new VP of 3rd Party
Development a non-qualified stock option to purchase 150,000 shares of Glu's
common stock pursuant to Glu's 2008 Equity Inducement Plan. Glu's historical
policy with respect to new hire stock option grants is to award a newly hired
employee his or her stock option on the second Tuesday of the month following
his or her employment start date; accordingly, the grant date for our new VP
of 3rd Party Development’s option grant will be February 12, 2013. The stock
option will have a six-year term, vest on a four-year schedule (25% of the
underlying shares will vest on the first anniversary of our new VP of 3rd
Party Development’s hire date, and 2.083% of the underlying shares will vest
monthly thereafter), and have an exercise price equal to the closing price of
Glu's common stock on the NASDAQ Global Market on the February 12, 2013 grant
date.

Glu's Compensation Committee adopted the 2008 Equity Inducement Plan, which is
a non-stockholder approved plan, to facilitate the granting of stock options
as an inducement to new employees to join Glu. NASDAQ Marketplace Rule
5635(c)(iv) requires a public announcement of equity awards made under this
type of plan.

About Glu Mobile

Glu Mobile (NASDAQ:GLUU) is a leading global developer and publisher of
freemium games for smartphone and tablet devices. Glu is focused on creating
compelling original IP games such as BLOOD & GLORY, DEER HUNTER, FRONTLINE
COMMANDO, GUN BROS, and SAMURAI VS. ZOMBIES DEFENSE on a wide range of
platforms including iOS, Android™, Windows Phone, Google Chrome and MAC OS.
Glu’s unique technology platform enables its titles to be accessible to a
broad audience of consumers globally. Founded in 2001, Glu is headquartered in
San Francisco with a major office outside Seattle, and international locations
in Canada, China and Russia. Consumers can find high-quality entertainment
wherever they see the ‘g’ character logo or at www.glu.com. For live updates,
please follow Glu via Twitter at www.twitter.com/glumobile or become a Glu fan
at www.facebook.com/glumobile.

BLOOD & GLORY, CONTRACT KILLER, CONTRACT KILLER ZOMBIES, DEATH DOME, DEER
HUNTER, DRAGON SLAYER, FRONTLINE COMMANDO, GUN BROS, SAMURAI VS ZOMBIES
DEFENSE, SMALL STREET, GLU, GLU MOBILE and the 'g' character logo are
trademarks of Glu Mobile Inc.

In the financial tables below, Glu has provided a reconciliation of the most
comparable GAAP financial measure to each of the historical non-GAAP financial
measures used in this press release.

                                                          
                                                              
Glu Mobile Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                              
                                               December 31,   December 31,
                                               2012           2011
                                                              
ASSETS
Cash and cash equivalents                      $ 22,325       $ 32,212
Accounts receivable, net                         11,881         11,821
Prepaid royalties                                -              483
Prepaid expenses and other current assets       2,487        1,881    
Total current assets                             36,693         46,397
                                                              
Property and equipment, net                      5,026          3,934
Other long-term assets                           227            404
Intangible assets, net                           10,889         10,078
Goodwill                                        19,440       21,991   
Total assets                                   $ 72,275      $ 82,804   
                                                              
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                               $ 7,785        $ 6,894
Accrued liabilities                              2,410          939
Accrued compensation                             5,989          5,404
Accrued royalties                                2,781          3,865
Accrued restructuring                            4              887
Deferred revenues                               9,031        7,139    
Total current liabilities                        28,000         25,128
Other long-term liabilities                     5,388        8,503    
Total liabilities                               33,388       33,631   
                                                              
Common stock                                     6              6
Additional paid-in capital                       271,016        260,744
Accumulated other comprehensive income           167            266
Accumulated deficit                             (232,302 )    (211,843 )
Stockholders' equity                            38,887       49,173   
Total liabilities and stockholders' equity     $ 72,275      $ 82,804   



Glu Mobile Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                      Three Months Ended           Twelve Months Ended
                       December 31,   December 31,   December      December
                       2012          2011           31,          31,
                                                     2012          2011
                                                                   
Revenues               $  20,981      $  15,174      $ 87,493      $ 66,185
                                                                   
Cost of revenues:
Royalties and other       2,052          2,576         8,940         12,920
cost of revenues
Amortization of          1,073        1,552       3,783       5,447   
intangible assets
Total cost of            3,125        4,128       12,723      18,367  
revenues
Gross profit             17,856       11,046      74,770      47,818  
                                                                   
Operating expenses:
Research and              13,566         12,660        54,275        39,073
development
Sales and marketing       6,272          3,930         20,893        14,607
General and               3,356          3,814         14,744        14,002
administrative
Amortization of           495            495           1,980         825
intangible assets
Restructuring charge      838            (92     )     1,371         545
Impairment of            -            -           3,613       -       
goodwill
Total operating          24,527       20,807      96,876      69,052  
expenses
                                                                   
Loss from operations      (6,671  )      (9,761  )     (22,106 )     (21,234 )
                                                                   
Interest and other
income/(expense),
net:
Interest                  4              10            21            (29     )
income/(expense)
Other
income/(expense),        260          (116    )    (368    )    776     
net
Interest and other
income/(expense),        264          (106    )    (347    )    747     
net
                                                                   
Loss before income        (6,407  )      (9,867  )     (22,453 )     (20,487 )
taxes
Income tax               (660    )     (152    )    1,994       (614    )
benefit/(provision)
Net loss               $  (7,067  )   $  (10,019 )   $ (20,459 )   $ (21,101 )
                                                                   
Net loss per share -   $  (0.11   )   $  (0.16   )   $ (0.32   )   $ (0.37   )
basic and diluted
                                                                   
Weighted average
common shares             65,678         62,973        64,318        57,518
outstanding - basic
and diluted
                                                                   
Stock-based
compensation expense
included in:
Research and           $  1,223       $  800         $ 3,491       $ 1,387
development
Sales and marketing       43             95            386           351
General and              560          475         1,945       1,372   
administrative
Total stock-based      $  1,826      $  1,370      $ 5,822      $ 3,110   
compensation expense

                                                                                                           
                                                                                                                        
Glu Mobile Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(unaudited)
                For the Three Months Ended
                 March 31,    June 30,     September    December      March 31,    June 30,     September    December
                 2011        2011        30,         31,          2012        2012        30,          31,
                                           2011         2011                                    2012         2012
                                                                                                                        
GAAP revenues
Featurephone     $ 10,478     $ 8,253      $ 7,248      $ 5,112       $ 4,165      $ 3,710      $ 2,924      $ 2,336
Smartphone        5,948      9,427      9,657      10,062      17,379     19,911     18,423     18,645 
Total GAAP        16,426     17,680     16,905     15,174      21,544     23,621     21,347     20,981 
revenues
                                                                                                                        
Change in
deferred
revenues and
amortization
of in-process
development
contracts
Featurephone
change in          (63    )     (6     )     5            (20     )     (7     )     17           (21    )     17
deferred
revenue
Smartphone
change in
deferred
revenue and       798        240        875        4,897       57         534        (167   )    (167   )
amortization
of in-process
development
contracts
Total change
in deferred
revenues and
amortization      735        234        880        4,877       50         551        (188   )    (150   )
of in-process
development
contracts
                                                                                                                        
Non-GAAP
Revenues
Featurephone       10,415       8,247        7,253        5,092         4,158        3,727        2,903        2,353
Smartphone        6,746      9,667      10,532     14,959      17,436     20,445     18,256     18,478 
Total non-GAAP    17,161     17,914     17,785     20,051      21,594     24,172     21,159     20,831 
Revenues
                                                                                                                        
GAAP gross         11,769       13,856       11,147       11,046        18,234       20,552       18,128       17,856
profit
Change in
deferred
revenues and
amortization       735          234          880          4,877         50           551          (188   )     (150   )
of in-process
development
contracts
Amortization
of intangible      817          703          2,375        1,552         753          932          1,025        1,073
assets
Change in
deferred          33         20         1          (99     )    60         67         (30    )    (121   )
royalty
expense
Non-GAAP gross    13,354     14,813     14,403     17,376      19,097     22,102     18,935     18,658 
profit
                                                                                                                        
GAAP operating     14,347       15,436       18,462       20,807        24,269       25,769       22,311       24,527
expense
Stock-based        (397   )     (505   )     (838   )     (1,370  )     (3,836 )     (3,038 )     2,878        (1,826 )
compensation
Amortization
of intangible      -            -            (330   )     (495    )     (495   )     (495   )     (495   )     (495   )
assets
Transitional       -            -            (981   )     (326    )     (173   )     (30    )     (192   )     (94    )
costs
Change in fair
value of           -            -            178          (117    )     (645   )     (386   )     954          (90    )
Blammo earnout
Impairment of      -            -            -            -             -            -            (3,613 )     -
goodwill
Restructuring     (490   )    (147   )    -          92          -          (320   )    (213   )    (838   )
charge
Non-GAAP
operating         13,460     14,784     16,491     18,591      19,120     21,500     21,630     21,184 
expense
                                                                                                                        
GAAP operating     (2,578 )     (1,580 )     (7,315 )     (9,761  )     (6,035 )     (5,217 )     (4,183 )     (6,671 )
loss
Change in
deferred
revenues and
amortization       735          234          880          4,877         50           551          (188   )     (150   )
of in-process
development
contracts
Non-GAAP cost
of revenues        850          723          2,376        1,453         813          999          995          952
adjustment
Stock-based        397          505          838          1,370         3,836        3,038        (2,878 )     1,826
compensation
Amortization
of intangible      -            -            330          495           495          495          495          495
assets
Transitional       -            -            981          326           173          30           192          94
costs
Change in fair
value of           -            -            (178   )     117           645          386          (954   )     90
Blammo earnout
Impairment of      -            -            -            -             -            -            3,613        -
goodwill
Restructuring     490        147        -          (92     )    -          320        213        838    
charge
Non-GAAP
operating         (106   )    29         (2,088 )    (1,215  )    (23    )    602        (2,695 )    (2,526 )
income/(loss)
                                                                                                                        
GAAP net loss      (3,172 )     (1,752 )     (6,158 )     (10,019 )     (6,841 )     (2,988 )     (3,563 )     (7,067 )
Change in
deferred
revenues and
amortization       735          234          880          4,877         50           551          (188   )     (150   )
of in-process
development
contracts
Non-GAAP cost
of revenues        850          723          2,376        1,453         813          999          995          952
adjustment
Non-GAAP
operating          887          652          1,971        2,216         5,149        4,269        681          3,343
expense
adjustment
Foreign
currency           (198   )     (363   )     (344   )     116           373          (205   )     460          (263   )
exchange
loss/(gain)
Release of tax    -          -          -          -           -          (2,427 )    -          -      
liabilities
Non-GAAP net     $ (898   )   $ (506   )   $ (1,275 )   $ (1,357  )   $ (456   )   $ 199       $ (1,615 )   $ (3,185 )
income/(loss)
                                                                                                                        
                                                                                                                        
Reconciliation
of net loss
and net loss
per share:
GAAP net loss
per share -      $ (0.06  )   $ (0.03  )   $ (0.10  )   $ (0.16   )   $ (0.11  )   $ (0.05  )   $ (0.06  )   $ (0.11  )
basic and
diluted
Non-GAAP net
income/(loss)
per share -      $ (0.02  )   $ (0.01  )   $ (0.02  )   $ (0.02   )   $ (0.01  )   $ 0.00       $ (0.03  )   $ (0.05  )
basic and
diluted
Shares used in
computing
Non-GAAP basic     52,048       54,587       60,461       62,973        63,229       63,802       64,562       65,678
net
income/(loss)
per share
Shares used in
computing
Non-GAAP           52,048       54,587       60,461       62,973        63,229       69,490       64,562       65,678
diluted net
income/(loss)
per share
                                                                                                                        
Non-GAAP
operating
expense
break-out:
GAAP research
and              $ 7,166      $ 8,439      $ 10,808     $ 12,660      $ 15,033     $ 15,697     $ 9,979      $ 13,566
development
expense
Transitional       -            -            (219   )     (23     )     (68    )     (1     )     (45    )     (70    )
costs
Stock-based       (100   )    (131   )    (356   )    (800    )    (3,260 )    (2,396 )    3,388      (1,223 )
compensation
Non-GAAP
research and      7,066      8,308      10,233     11,837      11,705     13,300     13,322     12,273 
development
expense
                                                                                                                        
GAAP sales and
marketing          3,757        3,344        3,576        3,930         4,375        4,701        5,545        6,272
expense
Transitional       -            -            (2     )     (5      )     -            -            (15    )     (24    )
costs
Stock-based       (66    )    (94    )    (96    )    (95     )    (115   )    (155   )    (73    )    (43    )
compensation
Non-GAAP sales
and marketing     3,691      3,250      3,478      3,830       4,260      4,546      5,457      6,205  
expense
                                                                                                                        
GAAP general &
administrative     2,934        3,506        3,748        3,814         4,366        4,556        2,466        3,356
expense
Transitional       -            -            (760   )     (298    )     (105   )     (29    )     (132   )     -
costs
Change in fair
value of           -            -            178          (117    )     (645   )     (386   )     954          (90    )
Blammo earnout
Stock-based       (231   )    (280   )    (386   )    (475    )    (461   )    (487   )    (437   )    (560   )
compensation
Non-GAAP
general and      $ 2,703     $ 3,226     $ 2,780     $ 2,924      $ 3,155     $ 3,654     $ 2,851     $ 2,706  
administrative
expense

                                                                                                         
                                                                                                                  
Glu Mobile Inc.
Non-GAAP Adjusted EBITDA
(in thousands, except per share data)
(unaudited)
                      For the Three Months Ended
                      March 31,    June 30,     September    December      March 31,    June 30,     September    December
                      2011         2011         30,          31,           2012         2012         30,          31,
                                                2011         2011                                    2012         2012
                                                                                                                  
GAAP net loss         $ (3,172 )   $ (1,752 )   $ (6,158 )   $ (10,019 )   $ (6,841 )   $ (2,988 )   $ (3,563 )   $ (7,067 )
Change in deferred
revenues and
amortization of         735          234          880          4,877         50           551          (188   )     (150   )
in-process
development
contracts
Change in deferred      33           20           1            (99     )     60           67           (30    )     (121   )
royalty expense
Amortization of         817          703          2,705        2,047         1,248        1,427        1,520        1,568
intangible assets
Depreciation            427          406          470          543           562          556          554          696
Stock-based             397          505          838          1,370         3,836        3,038        (2,878 )     1,826
compensation
Change in fair
value of Blammo         -            -            (178   )     117           645          386          (954   )     90
earnout
Transitional costs      -            -            981          326           173          30           192          94
Impairment of           -            -            -            -             -            -            3,613        -
goodwill
Restructuring           490          147          -            (92     )     -            320          213          838
charge
Foreign currency
exchange                (198   )     (363   )     (344   )     116           373          (205   )     460          (263   )
loss/(gain)
Interest and other
(income)/expense,       18           34           -            (10     )     (7     )     (5     )     (5     )     (1     )
net
Income tax             774        501        (813   )    152         440        (2,019 )    (1,075 )    660    
provision/(benefit)
Total Non-GAAP        $ 321       $ 435       $ (1,618 )   $ (672    )   $ 539       $ 1,158     $ (2,141 )   $ (1,830 )
Adjusted EBITDA

In addition to the reasons stated above, which are generally applicable to
each of the items Glu excludes from its non-GAAP financial measures, Glu
believes it is appropriate to exclude certain items for the following reasons:

Change in Deferred Revenue and Royalties. At the date we sell certain premium
games and micro-transactions, Glu has an obligation to provide additional
services and incremental unspecified digital content in the future without an
additional fee. In these cases, we recognize the revenue and any associated
royalty expense on a straight-line basis over the estimated life of the user.
Internally, Glu’s management excludes the impact of the changes in deferred
revenue and royalties related to its premium and freemium games in its
non-GAAP financial measures when evaluating the company’s operating
performance, when planning, forecasting and analyzing future periods, and when
assessing the performance of its management team. Glu believes that excluding
the impact of the changes in deferred revenue and royalties from its operating
results is important to facilitate comparisons to prior periods during which
Glu did not delay the recognition of significant amounts of revenue related to
its games and to understand Glu’s operations.

Amortization of In-Process Development Contracts. In conjunction with the
Griptonite acquisition, Glu assumed the remaining obligations to perform
services under Griptonite’s development contracts. The estimated fair value of
the future, excess profits from these contracts was recorded in purchase
accounting and is amortized as a reduction to revenue as services are
performed. When analyzing the operating performance of an acquired entity,
Glu’s management focuses on the total return provided by the investment
without taking into consideration any fair value adjustments made for
accounting purposes. Because the final purchase price paid for an acquisition
necessarily reflects the accounting value assigned to both the consideration
paid and to the intangible assets (including goodwill) acquired, when
analyzing the operating performance of an acquisition in subsequent periods,
the Company’s management excludes the GAAP impact of any adjustments to the
fair value of these acquisition-related balances to its financial results. Glu
believes that excluding the impact of the amortization of the customer
contract value from its operating results is important as they do not reflect
its ongoing operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes these charges.

Amortization of Intangible Assets. When analyzing the operating performance of
an acquired entity, Glu's management focuses on the total return provided by
the investment (i.e., operating profit generated from the acquired entity as
compared to the purchase price paid) without taking into consideration any
allocations made for accounting purposes. Because the purchase price for an
acquisition necessarily reflects the accounting value assigned to intangible
assets (including acquired in-process technology and goodwill), when analyzing
the operating performance of an acquisition in subsequent periods, Glu's
management excludes the GAAP impact of acquired intangible assets to its
financial results. Glu believes that such an approach is useful in
understanding the long-term return provided by an acquisition and that
investors benefit from a supplemental non-GAAP financial measure that excludes
the accounting expense associated with acquired intangible assets.

Stock-Based Compensation Expense. Glu adopted ASC 718, "Compensation – Stock
Compensation" beginning in its fiscal year ended December 31, 2006. Included
in the stock compensation expense is the contingent consideration potentially
issuable to the Blammo employees who were former shareholders of Blammo, which
is recorded as research and development expense over the term of the earn-out
periods, since these employees are primarily employed in product development.
Glu re-measures the fair value of the contingent consideration each reporting
period and only records a compensation expense for the portion of the earn-out
target which is likely to be achieved. In addition, Glu is exposed to
potential continued fluctuations in the fair market value of the contingent
consideration in each reporting period, since re-measurement is impacted by
changes in Glu’s share price and the assumptions used by Glu. When evaluating
the performance of its consolidated results, Glu does not consider stock-based
compensation charges. Likewise, Glu's management team excludes stock-based
compensation expense from its short and long-term operating plans. In
contrast, Glu's management team is held accountable for cash-based
compensation and such amounts are included in its operating plans. Further,
when considering the impact of equity award grants, Glu places a greater
emphasis on overall stockholder dilution rather than the accounting charges
associated with such grants. Glu believes it is useful to provide a non-GAAP
financial measure that excludes stock-based compensation in order to better
understand the long-term performance of its business.

Restructuring Charges. Glu undertook restructuring activities in the first,
second and fourth quarters of 2011 and the second, third and fourth quarters
of 2012 and recorded (1) a non-cash restructuring charge due to vacating a
portion of its offices in Russia, (2) cash restructuring charges due to the
termination of certain employees in its Brazil, China, Europe, Russia and U.S.
offices and (3) non-cash adjustments related to initial, estimated
restructuring payments no longer deemed payable. Glu recorded the severance
costs as an operating expense when it communicated the benefit arrangement to
the employee and no significant future services, other than a minimum
retention period, were required of the employee to earn the termination
benefits. Glu believes that these restructuring charges do not reflect its
ongoing operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes these charges.

Change in Fair Value of Blammo Earnout. As part of the acquisition of Blammo,
Glu committed to issue additional consideration in the form of Glu’s common
stock to the former, non-employee Blammo shareholders if certain revenue
targets are achieved. Glu recorded the estimated contingent consideration
liability at acquisition and will adjust the fair value of the liability each
reporting period. When analyzing the operating performance of an acquired
entity, Glu’s management focuses on the total return provided by the
investment (i.e., operating profit generated from the acquired entity as
compared to the purchase price paid including the final amounts paid for
contingent consideration) without taking into consideration any expenses
recognized post-acquisition related to the change in fair value of the
contingent consideration. Because the final purchase price paid for an
acquisition necessarily reflects the accounting value assigned to both the
consideration, including the contingent consideration, paid and to the
intangible assets (including goodwill) acquired, when analyzing the operating
performance of an acquisition in subsequent periods, the Company’s management
excludes the GAAP impact of any adjustments to the fair value of these
acquisition-related balances to its financial results. Glu believes that the
fair value adjustments affect comparability from period to period and that
investors benefit from a supplemental non-GAAP financial measure that excludes
these charges.

Transitional Costs. GAAP requires expenses to be recognized for various types
of events associated with a business acquisition such as legal, accounting and
other deal related expenses.  Additionally, Glu has incurred various costs
related to the transition and integration of Blammo, GameSpy and Griptonite
into Glu’s operations. Glu recorded these non-recurring acquisition and
transitional costs as operating expenses when they were incurred. Glu believes
that these acquisition and transitional costs affect comparability from period
to period and that investors benefit from a supplemental non-GAAP financial
measure that excludes these expenses.

Impairment of Goodwill. In accordance with ASC 350 “Goodwill and Other
Intangible Assets” Glu performs its annual goodwill impairment test as of
September 30. Glu recorded a goodwill impairment charge in the third quarter
of 2012 as the fair value of one of its three reporting units was determined
to be below its carrying value. As this impairment is non-recurring, Glu
believes it does not reflect the Company’s ongoing operations and that
investors benefit from a supplemental non-GAAP financial measure that excludes
this impairment, enabling them to compare the Company’s core operating results
in different periods without this variability.

Release of tax liabilities. In the second quarter of 2012, Glu recorded a
one-time, non-cash income tax benefit related to the release of certain
foreign income tax liabilities upon the expiration of the statute of
limitations. Glu believes that this one-time tax benefit does not reflect its
ongoing operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes this benefit.

Foreign currency exchange gains and losses. Foreign currency exchange gains
and losses represent the net gain or loss that Glu has recorded for the impact
of currency exchange rate movements on cash and other assets and liabilities
denominated in foreign currencies related to the revaluation of assets and
liabilities. Accordingly, foreign currency exchange gains and losses are
generally unpredictable and can cause Glu’s reported results to vary
significantly. Due to the unusual magnitude of these gains and losses, and the
fact that Glu has not engaged in hedging or taken other actions to reduce the
likelihood of incurring a sizeable net gain or loss in future periods, Glu
began, with the quarter ended December 31, 2008, to present non-GAAP net loss
and net loss per share excluding foreign exchange gains and losses for
comparability purposes. Glu believes that these gains and losses do not
reflect its ongoing operations and that investors benefit from a supplemental
non-GAAP financial measure that excludes these items, enabling investors to
compare Glu’s core operating results in different periods without this
variability. Foreign exchange gains/(losses) recognized during 2011 and 2012
were as follows (in thousands):

March 31, 2011      $ 198
June 30, 2011          363
September 30, 2011     344
December 31, 2011     (116 )
FY 2011              $ 789
                     
March 31, 2012       $ (373 )
June 30, 2012        $ 205
September 30, 2012   $ (460 )
December 31, 2012    $ 263  
FY 2012              $ (365 )

Contact:

Media & Investor Relations:
ICR, Inc.
Seth Potter, 646-277-1230
ir@glu.com