Mobile game publisher Glu Mobile narrowed its losses in the first quarter but had a sober outlook for next quarter, when it expects declining sales and widening losses.
Glu lost $3.65 million in the first quarter, or $0.12 per diluted share, compared to a loss of $5.75 million, or $0.19 per share, in the same period last year. The company's first-quarter net loss included a restructuring charge of $594,000.
First-quarter sales dipped to $17.28 million from $20.77 million last year.
Company CEO Niccolo de Masi said in a statement that the shift to fewer and larger titles will limit sales growth of games for smartphones over the next two quarters. He expects momentum to build in the fourth quarter of this year, when Glu has "several" new franchises slated for launch.
The company expects to lose between $4.4 million and $4.7 million in the second quarter on continued deterioration of sales to feature phones and a change in revenue splits from China Mobile, which accounted for 90 percent of sales in Glu's China MBox platform.
In an earnings call transcribed by Seeking Alpha, Glu Mobile CFO Eric Ludwig said that in February, China Mobile had "reduced the splits through all publishers in 15 of the key provinces for MBox, from 85:15 in the favor of the publisher to 50:50. This has had a direct impact on our revenues in China."
Ludwig said the company is working aggressively to increase new sales channels in China to reduce the impact of the revenue split but warned that it may take time to fully offset the decrease in sales. Glu expects second-quarter sales to come in between $13.6 million and $14 million.