Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.
What: Shares of Glu Mobile, (NASDAQ:GLUU) jumped nearly 28% Thursday after the freemium mobile game specialist delivered better-than-expected fourth-quarter results and forward guidance.
So what: Quarterly adjusted revenue rose 62% year over year to $42.8 million, which translated to adjusted net income of $0.07 per share, compared to a $0.05 per-share loss in the same year-ago period. Meanwhile, analysts were only looking for a breakeven quarter on sales of $32.2 million.
Going forward, Glu Mobile expects adjusted 2014 revenue to be between $142 million and $150 million, with adjusted net income from between $0.00 and $0.02 per share. Analysts were modeling a $0.05 per-share loss on sales of $121.4 million.
Now what: CEO Niccolo de Masi weighed in: "We believe we have begun a new era at Glu. One with solid foundations for a more predictable and sustainably adjusted EBITDA profitable, operational rhythm."
Today's optimism may continue to drive Glu Mobile from here, but keep in mind the company is still losing money based on generally accepted accounting standards. In the end, I simply have a hard time accepting the challenges and bad economics behind effectively monetizing free-to-play games. Before I'd be willing to consider Glu Mobile for my own portfolio, I want to know the company can ultimately achieve sustained profitability -- on a GAAP basis -- over the long-term.