Glu Mobile (GLUU) Q3 2020 Earnings Call Transcript

Glu Mobile (GLUU)
Q3 2020 Earnings Call
Nov 05, 2020, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the Q3 2020 Glu Mobile earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Harman Singh, VP of finance and investor relations.

Harman Singh -- Vice President of Finance and Investor Relations

Thank you, operator. Good afternoon, everyone, and thank you for joining us on Glu Mobile's third-quarter 2020 earnings conference call. On the call today are Nick Earl, president and chief executive officer; and Eric Ludwig, COO and chief financial officer. During this call, we will be making forward-looking statements regarding future events and the future financial performance of the company.

Any forward-looking statements that we make today are based on assumptions that the company believes to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events. We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements in the press release and during this conference call. These risk factors are described more fully in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q.

During this call, we will present both GAAP and non-GAAP financial measures. The non-GAAP financial measures are not intended to be considered in isolation from, a substitute for or superior to 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 the supplemental presentation accompanying today's earnings call that can be accessed via our investor website, www.glu.com/investors. As a reminder, consistent with our financial presentation and for all of the information aside from bookings or otherwise stated below, we will discuss results on a GAAP basis and refer you to changes in deferred revenue, the deferred cost of revenue, and non-GAAP operating expense total in our financial tables.

This data will provide a GAAP to non-GAAP reconciliation of the quarter's financial results based on the same methodology we've used in prior quarters. We are also providing a supplementary Excel file on our IR website to more easily aid in this reconciliation. Both the PowerPoint and Excel file are now accessible on the website. We encourage you to follow along with the slides during this earnings conference call.

And with that, I'd like to turn the call over to Nick.

Nick Earl -- President and Chief Executive Officer

Thanks, Harman. Hello, everyone, and thank you for joining. On today's call, I will cover highlights from the third quarter and give an update on our development pipeline and growth initiatives. Eric will then provide details on our financial results, revised guidance for 2020, and our preliminary outlook for next year.

We followed a very strong second quarter with better-than-expected top and bottom-line results in the third quarter. Bookings grew 22% year over year to $147.3 million, led by continued high player engagement and increased monetization across our live titles. Our focus on driving margin expansion primarily through greater productivity and UA spending produced record adjusted EBITDA as bookings stacked and our business scaled. We generated $45.7 million in free cash flow in the trailing 12 months and closed out Q3 with $318.1 million in cash to support our organic and inorganic growth strategies.

We also delivered record quarterly revenue and net income on a GAAP basis in the quarter. We entered 2020 with bookings guidance of $428 million or 1% year-over-year growth. In this year's first nine months, we have surpassed that with $435.8 million in bookings and today raise full guidance to $558.3 million at the midpoint, representing 32% annual growth. The significant increase reflects a favorable operating environment, the successful launch of Disney Sorcerer's Arena, and continued strong player engagement in our live titles.

We believe we are in the early stages of realizing the scale that we have spoken about as our bookings grow. We began the year expecting flat adjusted EBITDA year over year, and now, we expect to produce almost twice that amount. We reorganized our UA function at the start of the year with new initiatives around people, process, and technology to increase productivity. These initiatives are showing strong results as we are adding higher quality players and optimizing our UA spend.

We believe the model for driving the significant flow through we produced this quarter is sustainable as we enter 2021 and beyond. Bookings from our three growth games grew 13% year over year. Design Home was up 15%, driven by the ongoing benefit of strong UA performance in the prior quarter. During the quarter, we also relaunched our in-game e-commerce store, Design Home Inspired, and we have seen early positive results.

This is a high-margin opportunity that we expect will leverage our large Design Home user base over time. Covet Fashion was a real standout performer, growing 30%, led by a new Covet collection subscription along with our hair accessory feature and a very strong fall launch. Tap Sports Baseball bookings were virtually flat year over year, a performance we're very pleased with given the shortened MLB season. We also saw another quarter of strong results from Kim Kardashian: Hollywood, which is up 170% year over year, increasing our confidence this can become a growth game in 2021.

We are excited about what we believe is a large growth opportunity for Crowdstar and Glu Sports, our umbrella brands. First, we are leaning into the Crowdstar brand and its key pillars, which include inspiring players in their real lives by blending games and lifestyles; creating a female community with a sharp focus and understanding of women's fashions and interests; and developing elevated gameplay that makes users feel enriched and inspired through high aesthetics, quality, and style. In addition to our current growth games under this umbrella brand, we also have several other exciting developments to share. Under our Glu Sports brand, we are planning two new launches in 2021, Deer Hunter World and Tap Sports Fishing, as well as an updated version of the MLB Tap Sports Baseball.

These games are highly focused on the action-packed sports and outdoor genres and draw a largely male audience that complements our Crowdstar brand. I'm pleased to share some exciting news about P3, one of our most anticipated games. The title for P3 will be Table & Taste, a game that will allow users to play and engage with food pairings, aesthetic, and decor to create impressive dining experiences. Our Crowdstar studio is entering the food vertical and leveraging their Covet Fashion and Design Home success by applying their best-of-breed mechanics of the core loop and design structure.

The game will feature authentic recipes and branded decor with the most realistic graphics that the Crowdstar team has ever created to build Glu's next potential growth game. We believe the addressable market in the food category is significantly larger than both the home decor and fashion categories and serves a broader and more diverse demographic. Table & Taste retention rates in closed alpha have been very encouraging. More to come as we continue development toward a 2021 launch.

We've also made swift progress in developing a hyper-casual suite of games called Crowdstar Moments that will help elevate the Crowdstar brand. These ad-based games are designed to efficiently grow our user base and drive players into Design Home and Covet Fashion, two high-LTV games, as well as Table & Taste through cross-promotion. Given the potential upcoming changes in the UA ecosystem due to IDFA, Crowdstar Moments is positioned to allow us to expand our user base more efficiently while also diversifying our advertising business. With our two current Crowdstar growth games and the upcoming launches of Table & Taste and Crowdstar Moments, we believe this umbrella brand will continue to drive our growth going forward.

Looking at our Glu Sports pipeline, Deer Hunter World development is going very well. On the last earnings call, we said we would launch the game in 2021, and I'm happy to say that we are on track for a second-quarter release. The team is building out a more robust player-versus-player experience that is fully connected to the core loop. The title's deep social and competitive features and event-driven live ops will add more depth to the game.

We continue to see immense potential in this IP with its global appeal and high download history. Tap Sports Fishing remains in beta, and the team is focused on fine-tuning the core mechanic while developing the new user flow and social and meta-features. We look forward to updating you on these titles as we move into next year. Our growth strategy is structured around three strategic initiatives that we believe will drive long-term growth and margin expansion.

The first is to continue to grow and scale our three growth games through live operations and social events. Second, we have a robust road map in 2021 with titles that we believe have the potential to stack bookings and become growth games. We also are focused on acquiring assets that can benefit from our proven ability to use our infrastructure to create a winner. And third, our UA and marketing initiatives are designed to drive efficiency and productivity going forward.

We believe that these strategic priorities when combined with and executed on will help us scale the business and expand margins. On the acquisition front, we are actively evaluating opportunities that fit our target criteria. We have a strong record of acquiring quality assets over the years and utilizing our infrastructure to create growth games. The highlights of our acquisition history include taking the Glu Sports studio from an acquihire to $100 million a year franchise and Crowdstar from a small $50 million a year studio to a $280 million a year franchise with lifetime bookings that are expected to break $1 billion by the end of 2020.

We will continue to be highly discerning, pursuing opportunities that we believe will be financially accretive, and we are well equipped and positioned with ample cash on our balance sheet to pursue a transformative acquisition. In summary, we had a great third quarter and upwardly revised our guidance for the fourth quarter and the full-year 2020 to reflect the third quarter's outperformance and our expected strong finish to the year. Looking out to 2021, we believe we are well-positioned to continue to deliver solid top-line growth driven by the continued strength of our growth games, the steady progress, and contributions of our potential growth games, and the exciting launches we have slated for the year. We also sharpened our focus on more efficient marketing spending that we believe will drive increased profitability and margin expansion.

I would now like to turn it over to Eric, and then we'll take your questions.

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Great. Thanks, Nick. Good afternoon to everyone on the call. I will review our strong third-quarter financial results and then walk through our fourth quarter and full-year 2020 financial guidance.

While we plan on providing formal guidance for the full-year 2021 in early February, I will provide some context on our preliminary outlook. Our third-quarter results were significantly better than expected and positioned us for a record year in bookings and profitability, allowing us to beat and raise both bookings and EBITDA for the full year. GAAP revenue was $158.5 million, with net income of $13.4 million, both representing quarterly records. For the first nine months of 2020, revenue was up 34% as compared to the first nine months of 2019.

Bookings grew 22% year over year to $147.3 million, driven by strong player engagement and great live ops execution across all titles. For the first nine months of 2020, bookings was up 38% as compared to the first nine months of 2019, and our year-to-date bookings through September 30 is larger than 2019's full-year results. As Nick mentioned, our three growth games grew 13% year over year and contributed 71% of total bookings. Design Home was up 15% to $52.1 million.

Covet Fashion grew 30% to $22.4 million. And Tap Sports Baseball was essentially flat at $30 million, reflecting the shortened MLB baseball season. And looking at our potential growth games, Disney Sorcerer's Arena had bookings of $14.7 million, which puts its first two full quarters since going live in late March at total bookings of $36.8 million. Kim Kardashian: Hollywood bookings reached $12.4 million, a 171% year-over-year increase as a result of effective UA investment and player reengagement.

Diner DASH Adventures bookings were $9.4 million and, as expected, down year over year given that the game was launched just prior to last year's third quarter. Royalty-free Glu IP titles generated 60% of bookings. Ad revenue was $14.9 million or 10% of total bookings, representing a 13% increase over last year. Our daily payer conversion in the third quarter of 2020 was a Glu record of 5.1%.

This was up 50% from the third quarter of 2018. Our monetization over the same two-year period grew even faster, increasing 69% from $0.32 to $0.54 per user per day. Our monetization growth accelerated in the last 12 months as compared to the prior 12-month period. This growth in monetization reflects our continuing optimization of live operations, as well as adding systems and features to our games to increase player engagement.

I would now like to touch on the pillars of our updated UA investment strategy. We implemented an updated UA plan at the end of last year to drive productivity initiatives and efficiencies. We are now showing strong results in both our marginal flow through and our positive player retention rates as a result. We are efficiently adding higher quality players and better optimizing our UA spend.

These productivity initiatives are centered around people, process, and technology. On the people initiative, we reorganized our entire internal marketing team under new leadership and focus on horizontally building key brand verticals in our lifestyle and Glu Sports brands at the end of last year. We also fostered better coordination between our studios to enable tighter feedback loop within the Glu infrastructure. Additionally, we took a data-led approach into our processes, improving user identification in our ad campaigns, and focusing on high ROI opportunities to drive increased user retention.

On the technology front, we enhanced our proprietary capabilities and rebuilt key performance dashboards, enabling better decision-making and more predictable growth rates on paid cohorts. This was a steady and positive build throughout the year as we tested and implemented these initiatives while building our user base during the shelter-in-place period. These initiatives, taken together, have helped produce more successful campaigns that are generating a higher ROI, as well as allowing us to shift spend from underperforming campaigns to successful campaigns while they're going on. We believe this shift in our approach to UA spend will foster bottom-line increases and margin improvement without compromising top-line growth moving forward.

Looking at the expenses for the third quarter of 2020. We spent $3.4 million less on UA and marketing as compared to our high-end guidance due to the positive UA efficiencies that I just spoke of. UA spend was $34.5 million or 23.4% of bookings, compared to $40.2 million in last year's third quarter and $57 million in this year's second quarter. We spent $2.3 million less non-UA opex as compared to our high-end guidance due to disciplined opex management.

On a year-over-year basis, operating expenses, excluding UA and marketing, were $36.8 million compared with $30.7 million in last year's third quarter. Our adjusted EBITDA was an all-time record in absolute dollars and was driven by a combination of the 76% marginal flow through on the incremental $12.3 million bookings at the high end of guidance, coupled with disciplined opex management. We generated free cash flow of $31.5 million in the third quarter and $45.9 million for the last 12 months. This is up 90% compared to the prior 12-month period ended September 2019 and reflects our scaled margins in the second and third quarter.

Our cash balance at the end of the quarter was $318.1 million, which amply supports our acquisition plans. We are raising guidance for the fourth quarter and full year, reflecting both the third-quarter beat and raise. We expect fourth-quarter bookings in the range of $119.5 million to $124.5 million, representing a 12.6% increase at the midpoint over last year's fourth quarter. Compared to the fourth quarter of 2019, we expect each of our three growth games plus Kim Kardashian: Hollywood to grow on a year-over-year basis, benefiting from the increased monetization that we have realized throughout the year.

As it relates to UA investments and profitability on an adjusted EBITDA basis, I'd like to provide some context to our strategy in the fourth quarter. On the expense side, at the midpoint of our bookings guidance, we expect UA costs to be approximately $19 million with other adjusted operating expenses of $38.5 million. CPIs were seasonally high in the fourth quarter due to holiday e-commerce spend. This year's CPIs are also pressured higher due to election spending on Facebook and other social media platforms.

In the face of this environment, we plan to dial back our UA investment in the fourth quarter and start investing more late December and early in the first quarter of 2021 to leverage the market when CPIs drop. For the full year, we expect bookings in the range of $555.3 million to $560.3 million. At the midpoint, that represents a 31.8% increase over the prior year, reflects outstanding performance from our three growth games, the resurgence of Kim Kardashian: Hollywood, a full quarter of contribution from Diner DASH Adventures, and the successful launch of Disney Sorcerer's Arena. In looking at expenses, at the midpoint of our bookings guidance, we expect UA and marketing will be $146.1 million or 26.2% of bookings.

And all other adjusted operating expenses are forecasted to be $148.1 million. We expect to end the year with at least $365 million of cash and no debt, which represents significant free cash flow generation. I would point out that in the fourth quarter, we expect to receive four monthly AR payments from Apple with only two monthly payments in the first quarter of 2021. This happened last Q4.

And thus, our final 2020 cash flow statement will reflect 12 months of payments from Apple. As we look to 2021, in addition to our focus on UA efficiencies to produce higher marginal flow through to the bottom line, we are fine-tuning our investment strategy supporting new title launches. In the past, I've spoken about the four phases of profitability around the new title launch. Beginning with our first launch in 2021, we expect to take a soft launch approach, which would allow us to leverage organic installs for featuring, cross-promotion, and lower CPI costs over a longer period of time.

This soft launch approach, we believe, will significantly reduce the operating loss in the first full quarter of launch and accelerate the timeline to profitability for each game. We have previously launched titles using this investment approach, so this is less of a new process but more of a reflection of our strategic priority to drive scaled margins in 2021 and beyond. When categorizing our titles, we have used the baseball analogies of singles, doubles, triples, and so on. Singles have bookings that range from $25 million to $75 million per year and have low studio margins due to the lower scale.

Diner DASH Adventures, Disney Sorcerer's Arena, and Kim Kardashian: Hollywood fit that category. Doubles can range from $75 million to $150 million in annual bookings and have studio margins that range from 25% to 30%. Covet Fashion and the Tap Sports Baseball franchise are doubles. Design Home is a triple with expected bookings of $210 million in 2020, and its studio margins are also higher than our other two growth games.

I would refer you to our Investor Relations slide deck for the full table outlining our definitions of the three phases and the bookings and scaled game margin ranges for singles, doubles, etc. Our stated strategy is to stack bookings from new titles on top of growing our three growth games. To the extent that we add more growth games, we believe that our EBITDA margins will continue to expand as a percentage of bookings. I'll now provide some directional comments on our outlook for bookings for the full-year 2021.

And looking at next year on a preliminary basis, we expect bookings from our current live titles in the range of $595 million to $605 million. This comprises our three growth games to grow 8% to 10% on a year-over-year basis. We anticipate that the combination of bookings from our potential growth games and catalog titles will produce flat to low single-digit percentage bookings year over year. For modeling purposes, we expect that the first quarter of 2021 will be largely flat from our high-end guidance for the fourth quarter of 2020, reflecting further seasonality in Tap Sports Baseball but offset by strength of increased UA spend in the first quarter.

Not included in this booking guidance range are contributions from the launch of four new original IP titles in 2021. When we provide formal guidance in 2021 in February, we will continue our methodology of not including bookings from games that are not yet live. Table & Taste and Deer Hunter World are exciting games we believe have the potential to be scaled growth games. We believe that they can be mid to high singles in our baseball parlance in the first 12 months and grow into doubles within the first 24 months after launch, which, if achieved, should drive significant margin expansion.

In addition to the new titles expected to drive top-line growth in 2021, we are confident that we will execute on our acquisition strategy to help us scale our bookings. Given our strong performance in 2020 and the momentum we are building, we expect to generate increased profitability on an adjusted EBITDA basis with continued year-over-year margin expansion in 2021. We expect 2021 adjusted EBITDA margin expansion of approximately 220 basis points to 420 basis points from our current midpoint guidance for the full-year 2020 expectations. This margin profile for 2021 is inclusive of new title contribution.

Adjusted EBITDA margins are expected to be a high single-digit percentage of bookings in the first quarter due to Tap Sports Baseball seasonality and our ramp spend in UA due to the seasonally lower CPIs in January and February. I am very pleased with our strong third-quarter results on the top and bottom line and the increased outlook for 2020. The combination of the more efficient UA investments, coupled with our disciplined opex management, has allowed us to scale margins from the first to third quarter, and we believe again to the fourth quarter. We believe that our robust 2021 new title slate of four original IP titles and momentum in our three growth games will drive meaningful growth and margin expansion.

I look forward to providing you with an update on our progress on the February earnings call. With that, we'll open the call for questions. Operator?

Questions & Answers:

Operator

[Operator instructions] Your first question comes from Mike Hickey with Benchmark.

Mike Hickey -- The Benchmark Company -- Analyst

Hey, Nick and Eric. You guys are good. Congrats on your quarter. First question on M&A, you've clearly been patient, I think, when you look at your cash balance and sort of what your peer set is doing.

But now, you've seen sort of primed and maybe identified targets. What exactly do you mean by a transformative deal? And I have follow-up. Thanks.

Nick Earl -- President and Chief Executive Officer

Yeah. Hey, Mike, thanks for the question. So, yes, we've been talking a lot about M&A. We still don't have a deal to announce, but I can tell you that we are very much evaluating multiple companies right now.

We've got an enormous emphasis on M&A. We just think this is a critical part of our growth strategy, and given our cash position, we think we're well-positioned to find something and make the decision to go with it. What we mean by transformative is think about what Crowdstar did for Glu four years ago. If you remember that, it truly transformed the company.

That was only a roughly $50 million acquisition. But the upside we've seen with the way we've been able to leverage our infrastructure and partner with the incredible talent with that group has just taken it to a level that has really changed the company. So that's really what we mean. And we think we're able to expand the top end of the range in terms of what we spend.

Mike Hickey -- The Benchmark Company -- Analyst

Cool. All right. Good. The second question for me.

Congrats, I guess, on the reveal of Table & Taste. Looks very interesting. Can you just sort of download, I guess, a few things for us? How do you sort of balance this between a domestic and international opportunity? Maybe what you've done internally within Crowdstar in terms of team size and what engine, whether that's new or if you're leveraging something else from your portfolio. And then within the alpha phase, just sort of, as much as you can, what you're seeing in sort of engagement, retention, and monetization.

And then I guess lastly, I'm really curious about the Crowdstar Moments. It sounds hyper-casual. Just curious how far you are along the development curve there. And when do you think you'll be able to sort of deploy that to drive UA for your three growth games.

I'm guessing Table will be a growth game.

Nick Earl -- President and Chief Executive Officer

That's sort of our expectation. This is a game that allows players to really engage with food in a high-aesthetic way. So pairings, the food, recipes, the decor, just getting that full dining experience. And for anyone who watches the Food Network, I think you get a sense of just how much interest and excitement there is about this general space.

What we like about this game is that it really stands on the shoulders of our two giants, Covet Fashion and Design Home, in terms of the structure and the construct, the very engaging core loop of you build something, you submit it for voting. It's very social, has a very deep elder game. And we're continuing to improve that and expand that as we expand the live ops. And all of that learning goes into Table & Taste.

But it's in a theme that we believe is much more ubiquitous and broad to decor and fashion just given that everyone eats every single day and obviously has a lot of interest in food. So from that perspective, we think this is a really interesting game. It leverages the expertise that's in the studio. We've had several of the key leaders internally and Crowdstar move over to head this up.

We've brought some people, some very talented people from the gaming industry, and beyond to join and brought people up from the other games. So there's really been this kind of mitosis in the Crowdstar studio where we've split into multiple teams and really expanded based on the talent there. So very excited about it. It's on the Unity engine.

And it has the look and feel of a Crowdstar game. But just the way the Design Home leverage the learning from Covet Fashion and is roughly 3 or 4 times the size, we think this is just a big opportunity because of the learning that has been laid out. I would turn to Crowdstar Moments, which is just another pace of the Crowdstar puzzle for us. This is really an opportunity for us to build a platform where we can engage users at low CPI, bring them in, and cross-promote them to the higher LTV games, all three of the big Crowdstar games.

And we think this is an exciting time to do it because of the challenges that do exist on the user acquisition front, we think this is a good mitigation and offset to that potentially. These are hyper-casual games that are very simple in terms of the loop and the mechanic. But unlike other hyper-casual games out there, these are very, very high aesthetic, very rich graphics, really beautiful to look at. And we think they're going to bring in that user, introduce them to being in this space.

And then we have an opportunity to cross-promote them into the higher LTV games. So it's not out just yet. We've been testing it in closed fashion, but we'll be getting that out in beta and launching it shortly. And we think this could be a contributor to next year, not only as a stand-alone set of games but also as a platform to bring in very qualified users into the Crowdstar set of games.

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Yes. Just two things to add here. Back to Table & Taste, on the broader appeal, Nick touched on this a bit, but I think the great thing about Table & Taste is the audience we're going after here. We think there's going to be more broad demographic, male and female; more broad demographic, international versus domestic; as well as more broad demographic appeal age-wise.

So I think that's kind of point number one. And then we have had this game in a closed alpha. And for where that title was at closed alpha compared to Design Home and Covet Fashion, we're pleased with the improvements in -- sorry, improvements in KPIs compared to where Design Home and Covet Fashion were at that same stage.

Mike Hickey -- The Benchmark Company -- Analyst

Good stuff. One quick one before I go here. The Crowdstar Moments, is that Crowdstar that is, in fact, developing that hyper-casual portfolio? Or is that a new studio you guys have created?

Nick Earl -- President and Chief Executive Officer

Yes, that is Crowdstar. We've extended Crowdstar and grown from being here in San Francisco to our Toronto studio, which is a very talented group that, among other games, is responsible for Kim. And they've had some excess capacity there, and they have been really hungry to expand what they're working on. So that studio now reports into the Crowdstar, like in a larger group, and they are going to be working in partnership with folks here.

They're going to be working primarily on this, on the Crowdstar Moments. So part of Glu and part of the existing infrastructure and kind of all of the capabilities that we've got, the vernacular, the whole bit, but expanding out from the Bay Area footprint that Crowdstar has traditionally been in.

Mike Hickey -- The Benchmark Company -- Analyst

All right. Good stuff. Good luck, guys. Thank you.

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

All right. Thanks, Mike. Thanks for the questions.

Operator

Your next question comes from Tyler Parker with KeyBanc.

Ashley Owens -- KeyBanc Capital Markets -- Analyst

Hi, guys. This is Ashley on for Tyler. Just two for me. First one, given the focus on your margin flow-through, how should we think about floor level margins going forward? Should it be 15% in growth where you guys aren't really seeing any gains? And then on Diner DASH, you guys touched on weakness versus last year.

And if I'm not mistaken, you didn't guide for it to grow in 4Q. I'm just curious if we can get an update on how'd the game perform moving forward. Thanks.

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Great. Thanks, Ashley. So, yes, on the first topic about margins, I think if you look at our stated guidance for 2021 of growing 220 to 420 basis points off of the full-year guidance, you'll get to a 15% to 17% margin. And that is inclusive of new title launches expected next year.

And new title launches will be kind of overall bottom line in absolute dollars contributory, not a big amount. But they are not bigger than that 15% to 17% margin. So the core business is strong and growing, and new titles are our investments. But overall contributory in absolute dollars for the year to a small, small degree.

But we're very, very pleased with being able to grow from two years ago, 10% margins and 10% margins, this year about 12.6% margins and into the 15% to 17% next year. And then in terms of Diner DASH Adventures, when you look at my three phases of profitability to scaled title launches, Diner DASH is kind of firmly in that middle phase, Phase 2. So as an overall title right now, total revenue minus total cost allocated, it is in the post breakeven phase. So it's kind of scaling its way up.

The bigger question will be, where is the growth profile? Does it grow from a mid-single to a high single in my baseball parlance? Right now, my current quarter, nine and change. You'll see it's in the $35 million to $40 million so that would be kind of a low to mid-single. And our goal is really to turn low singles into high singles, high singles into doubles, and so on and so forth. And we've proven that out with Design Home coming out of the gates and becoming a double the first year, and now, it's a triple four years on.

Covet Fashion, when we acquired Crowdstar, was a title that was sticking around right at about $42 million to $45 million a year for several years running. And now, that team has fantastically grown that and doubled it in the last three years to $80-plus million of bookings. So that is really our focus, is to stack bookings, to grow growth games and then to move these growth games from the singles to doubles, doubles to triples and, God willing, triples to home runs and beyond. That would be a great goal for us.

Ashley Owens -- KeyBanc Capital Markets -- Analyst

Great. Thanks, guys.

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Thanks, Ashley.

Nick Earl -- President and Chief Executive Officer

Thank you.

Operator

[Operator instructions] Your next question comes from Darren Aftahi with ROTH.

Dillon Heslin -- ROTH Capital Partners -- Analyst

Hi. Thanks for taking my question. This is Dillon on for Darren. First one around user acquisition.

You talked a little bit about some of the efficiencies you're seeing. How big of a driver in 2021 is the Crowdstar Moments game with sort of like the co-branding and organic into helping the accretive-ness that you're sort of projecting for 2021 margins?

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Hey, Dillon, good to catch up on. So first off, talking about the UA efficiencies. We've grown our daily conversion. So how many people spend in the game on a daily basis, over the last two years, we've grown that from 3-ish percentage to 5-ish percentage, so a very significant improvement in conversion.

So what that really says is that in this industry, in our case, 95% of people we get as either organic downloads or paid downloads do not spend in the game. So there's a vast opportunity, the more you can do a better job in the UA function, and you move that needle even slightly, it becomes a huge multiplier effect. So what we have done over the last I'd call it the last 24 months but, really, the last 12 months under a new leadership and under a refined focus on UA is really trying to do a much better job at people -- talk about people, process, technology around the UA function. Building a better team, getting them more embedded with the game teams doing on the process side, being able to kill losing campaigns while they're happening, and then even more importantly, being able to redeploy those dollars to campaigns that are actually more efficient.

And then deploying technology. So all of this is really -- over the last two years, we've improved our conversion. Last year, a lot of that improvement has come on the backs of this UA efficiency. So then as it gets to Crowdstar Moments, Crowdstar Moments, this is a hyper-casual suite.

I would set expectations that we're going to have many, many titles launching under the Crowdstar Moments brand. This is not going to be one title. This will be a suite of gains and our expectation is that one out of three or one out of four of the ones we put out there will be successful and the others won't be. And this is going to be a little bit of throwing spaghetti against the wall and seeing what sticks.

But our whole goal here is, can we build a business, an ad-based business buying users for very cheap, low CPI, which is the hallmark of the hyper-casual space. And if we could be breakeven or contributory to the bottom line from just that ad revenue from those users, that would be fantastic. That'd be a win right in and of itself. Secondly, can we then become successful -- as we build that Crowdstar Moments user base, can we bring 2% to 10% of them and convert them into a higher monetizer or into a higher player in Design Home, Covet Fashion, or Table & Taste.

And if we can do that, we're arbitraging CPI. We're buying users for $0.25, and instead, we're converting them over into a Design Home, Covet Fashion, or Table & Taste where CPIs are in the $4, $5, or $6. So you can see if we can be successful to fund a great cross-promotion campaign and have a business that's breakeven or profitable, it's a win-win situation. So that is what we're excited about as we move forward into Crowdstar Moments, as well as kind of talking about our UA efficiencies.

Dillon Heslin -- ROTH Capital Partners -- Analyst

Got it. Thank you. That's really quite helpful. On the new game soft launch strategy, could you sort of go into depth a little bit more about what exactly that means? And then how do you judge when is the right time to sort of go with a more aggressive approach on UA for those new games you're going to soft launch?

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Yes. Great question. So I'd say this is not so much a new approach. We used to launch games this way three, four, five years ago.

I would say, really, the two most recent launches, Diner DASH Adventures last year and Disney Sorcerer's Arena this year, we lean heavy into UA in the first quarter of launch. And what that looked like was -- Diner DASH is a great example. We came out of the gate, deployed a lot of UA dollars when CPIs were low. We had a fantastic third quarter of last year in terms of bookings, downloads.

But then we kind of had a bit of a hangover when we then dialed back. And we kind of had the unfortunate circumstances of launching Diner DASH in the third quarter when CPIs were normalized, and then we got to the fourth quarter, and CPIs always skyrocket. So we kind of are set up for not the greatest success by spending great low CPI and then we had to reverse and spend less, what you saw was revenue go down. Now, that second quarter of launch for Diner DASH, it was actually breakeven and profitable.

So it kind of got to Phase 2 of my definition quickly. We probably would not have done anything differently on Disney because, frankly, we launched Disney into shelter-in-place, when CPIs were fantastic. So I would say if we ever come across an environment of CPIs, like we saw in late March and April and maybe in early May, I probably would throw out this soft launch approach, and I would gobble up all of the organic -- or the paid users I could. That being said, in normalized environments, we believe that harvesting the cross-promotion of our own brands, harvesting the brand marketing that we build up around a title launch.

As Table & Taste gets to launching, we will be doing brand marketing. We'll be doing cross-promotion. We will have Apple and Google featuring. And then the other thing we also want to avoid is spending too much on UA to then drive up CPIs, and then you kind of become your own worst enemy.

So the other part of the soft launch approach is to kind of ease ourselves into slowly get that CPI going up as we're spending more, and we can hopefully harvest under the curve those favorable CPIs and favorable users over a longer period of time. But again, I would make it very clear that -- I encourage you to look at the chart in the IR presentation that really talks about both the three phases, as well as the baseball analogy. We expect kind of one quarter of launch to where a title will be kind of operating losses, not massive, not like what we saw with Diner DASH and Disney, but kind of modest operating losses. And then our plan over the next eight quarters is to go from loss to then breakeven to scaled profitability.

And I lay out what scaled profitability looks like for a single, for a double, for a triple, a home run, and a grand slam. And so when we talk about over 24 months, whatever station in life a title will become if a game is going to become a single in two years, then it will get to that 15% to 20% margin. If it's going to be a double, it will be at the 25% to 30% category, and so on and so forth. Now, lastly, what I would say is we do see games go from a station in life where they're at and then grow.

Design Home has gone from zero to double, now to a triple, and it's approaching a home run as it gets to over $0.25 billion a year of bookings. So it does continue to grow. So we're always looking at how we continue to optimize these games. But yes, that's kind of how that rolls out.

Dillon Heslin -- ROTH Capital Partners -- Analyst

Great. Thank you. Last one if I may. Are you able to quantify at all sort of the engagement from the e-commerce perspective on Design Home, maybe like sort of the amount of users that you're seeing on sort of a daily or a monthly basis that are actually sort of taking that trajectory?

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Yes. Nothing to announce at this moment. I will say that we are pleased with the Design Home Inspired performance to date. But it's probably too early to be talking about metrics and impact to the business yet.

But it's a success, and we're looking forward to continuing investing in Design Home Inspired.

Nick Earl -- President and Chief Executive Officer

Yes. The one thing I'd add is that, as you know, we had a first run with this a few months, a couple of quarters ago. And while that didn't work out per se, we learned a lot about what to do and what not to do. And as we've moved to a new partner and as we're really building this out, we feel like we're in a just much more informed and better place with which to build this part of the business.

This is a new function to merge e-commerce and games, as you know, and we're really first to do it. So we're learning a lot, but we feel like we're really on a good trajectory with this. And we'll continue to build it. And as we start to get KPIs that are meaningful, we will share those with you.

But right now, I think I would be just happy in saying that we're definitely going in the right direction.

Dillon Heslin -- ROTH Capital Partners -- Analyst

Great. Thanks, guys.

Nick Earl -- President and Chief Executive Officer

All right. Thanks, Dillon.

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Thanks, Dillon.

Operator

Your next question comes from Franco Granda with D.A. Davidson.

Franco Granda -- D.A. Davidson -- Analyst

Hey, guys. Thank you for taking my questions and congrats on the strong results. You've obviously put a lot of thought into IDFA and the impact that it does have in your business. You're introducing Crowdstar Moments to kind of combat this.

But can you perhaps speak to how IDFA will impact your new UA platform as it stands with the changes you've introduced over the past year?

Nick Earl -- President and Chief Executive Officer

Yes, sure. Hey, Franco. So, yes, this continues, like a lot of our peers in the space, to be a real key focus for us. We certainly have a lot of respect for IDFA and the change you could bring.

With that said, we've been working diligently for the last six months, and we've got another few months, at least, to prepare for this. So we're very confident as we sit here. It's really pushed us to do a few things. One is the cross-promotion push, we talked about Crowdstar Moments.

We are leaning heavily into branding. Basically, anything to increase organics and reduce reliance on paid media, we're exploring, working on technology and process to make sure that the users we bring in are ultimately going to be engaged and hopefully spend, but certainly engaged. We're very fortunate in that the vast part of our portfolio is really around these lifestyle and casual games. And we just think they are way less affected and susceptible to changes from IDA partly because they're big brands and partly because they're not dependent and reliant on the really big spenders.

They're much more dependent on engaged, kind of high spender frequency and more volume of users. So we think we're in good shape there. Other tech we're building is -- and process around probabilistic marketing models, anything to predict player value and create a better understanding of what sort of value they're going to bring to the table. So I think if you look across people, process, technology, the fact that we've been preparing for a long time, the fact that most of our games are in the lifestyle and casual space.

Even our sports games, which are more core, have really strong brands and attract organics. And then the data-led approach in our process and the way we use data science. I think we're well-positioned. No one knows how it's going to play out from a quantitative perspective.

But I think from a qualitative perspective, we feel like we're doing the right things. And as we will -- we are right now, and we'll be in good shape when that actually rolls out.

Franco Granda -- D.A. Davidson -- Analyst

Awesome. Thanks for the color, Nick. I have one more question if I may. So you clearly expect Deer Hunter and Table & Taste to be your biggest launches next year.

Can you perhaps speak to Tap Sports Fishing? The timing of the launch, as well as how you size the opportunity for this one, would help. Thank you.

Nick Earl -- President and Chief Executive Officer

Yes. Yes. And thanks for asking about Tap Sports Fishing. It's a game that we're really happy with.

We're really looking forward. This is just in early beta right now. It's been really working out the bugs from a stability perspective. And now, we'll be getting into Australia and really testing out the core loop that we've been building, that the team has been focused on.

So it's still early stage, but the indications are very positive. And what we like about this game is that you've got that really nice combination of a highly engaging core loop and mechanic. It's really fun to fish. And then you've got that real depth, that really social, meta depth, and PvP play and really strong user flow that gets you into the elder game for the ultimate spender frequency, spender depth, and driving that LTV.

You put those two things together with a theme and an outdoor activity that people absolutely love around the world, is just people are so unbelievably passionate about fishing. So we think we're on to something there. And it's developed by the very talented Glu Sports group that does Deer Hunter and baseball. So we're looking forward to them showing up with two big games in 2021.

No specific update on timing other than to say 2021. But as we get into the Q4 earnings call and beyond, we'll be talking more about this one for certain.

Franco Granda -- D.A. Davidson -- Analyst

Awesome. Thank you.

Nick Earl -- President and Chief Executive Officer

All right. Thanks, Franco.

Operator

[Operator signoff]

Duration: 51 minutes

Call participants:

Harman Singh -- Vice President of Finance and Investor Relations

Nick Earl -- President and Chief Executive Officer

Eric Ludwig -- Chief Operating Officer and Chief Financial Officer

Mike Hickey -- The Benchmark Company -- Analyst

Ashley Owens -- KeyBanc Capital Markets -- Analyst

Dillon Heslin -- ROTH Capital Partners -- Analyst

Franco Granda -- D.A. Davidson -- Analyst

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