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 investing thesis.
What: Shares of Glu Mobile (NASDAQ:GLUU) rose more than 23% Thursday after the freemium game specialist announced better-than-expected fourth-quarter results and a new game featuring singer and songwriter Katy Perry.
So what: Quarterly adjusted revenue rose 78% year over year to $76.2 million, led by the "ongoing traction" of its Kim Kardashian: Hollywood, Racing Rivals, and Deer Hunter 2014 titles. That resulted in a 57% increase in adjusted earnings per share to $0.11. Analysts, on average, were only expecting adjusted earnings of $0.02 per share on sales of $63.8 million.
In addition, Glu Mobile signed a five-year exclusive mobile gaming partnership with Katy Perry, under which it will create a free-to-play mobile game using her likeness and voice to be released in the second half of 2015.
Now what: For the current quarter, Glu Mobile expects adjusted revenue between $50 million and $52 million, which should translate to an adjusted loss between $3 million and $1 million, equating to a per-share loss of between $0.03 and $0.01. Curiously, analysts were modeling significantly better first-quarter earnings and sales of $0.03 per share and $58.2 million, respectively.
For the full year 2015, however, Glu Mobile sees adjusted revenue between $245 million and $275 million, and adjusted net income between $0.23 per share and $0.28 per share.The mid-point of both ranges sits above Wall Street's expectations for adjusted 2015 revenue of $229.3 million and earnings of $0.24 per share.
In the end, Glu Mobile did have a great fourth quarter and sealed an encouraging deal with Katy Perry. However, I'm personally still skeptical given the difficulty in consistently pumping out and monetizing free-to-play mobile games, the target audience for which tends to be fickle in their loyalties. For now, that's why I have no problem continuing to watch Glu Mobile from the sidelines.
Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.