After its revenue fell two quarters in a row, mobile game maker Glu Mobile
That brings us to the obvious question: Will Glu's legacy of losses eventually turn into profits? Before we discuss that, let's take a brief look at the financial highlights for its first quarter.
Into the numbers
Glu's revenue increased by 31% from the year-ago period, to $21.5 million, predominantly driven by revenue derived from smartphone-based games, which jumped by an astounding 158%. However, this also meant that its operating expenses increased by 71%, thanks to research and development-related costs that doubled over the previous year. The result was that the company's bottom line stayed in the red, recording a net loss of $6.8 million.
There's plenty to smile about, though. Here's why.
A smart future
Smartphones such as Apple's
And Glu is doing its best to grab a larger share of the smartphone market with a lineup of 23 gaming titles scheduled for release this year. With the company responsible for the greatest number of gaming titles in Google Play's top 100 grossers, apart from fellow game maker Zynga
A technological leap for gaming
Research firm Gartner suggests that within the gaming industry, growth in mobile gaming will be the highest. And that's slated to happen with smartphones and tablets evolving into even more powerful devices, with Apple being one of the most visible examples. And with Apple set to release the iPhone 5 later this year, Glu has the opportunity to shore up its revenue even further, given that it already derives 67% of its smartphone-based gaming revenue from Apple's platform.
Moreover, with NVIDIA
A Foolish conclusion
Glu has zero debt and expects its operating cash flows to turn positive by the fourth quarter of this year, which points to an eventually profitable scenario for the company. Especially when you consider that Glu's fortunes are closely linked to the booming smartphone industry. If you wish to stay up to speed with Glu's march toward profitability, you can add it to your free watchlist.
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Keki Fatakia does not hold shares in any of the companies mentioned in this article. The Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Google, Apple, and NVIDIA. Motley Fool newsletter services have recommended writing puts on NVIDIA. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.