Q2 2019 Earnings Call
Good afternoon, ladies and gentlemen, and welcome.
Q2, 2019, Glu mobile earnings conference call.
At this time all participants are in listen only mode. Later, we'll conduct a question answer session and instructions will follow what's the time.
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As a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host I'm missing.
Vice President of Finance and Investor Relations you may begin Sir.
Thank you operator, good afternoon, everyone and thank you for joining us on Glu mobile second quarter 2019 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 FCC 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 our GAAP results and we encourage investors to consider all measures before making any 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 todays earnings call that can be accessed via our investor website, Www Dot Glu dotcom forward slash investors.
As a reminder, consistent with our financial presentation and for all the information aside from bookings or otherwise stated below we will just discuss results on a GAAP basis and for you to changes in deferred revenue deferred cost of revenue and the non-GAAP operating expenses total in our financial tables.
This data will provide a GAAP to non-GAAP reconciliation to the quarter's financial results based on the same methodology, we've used in prior quarters.
We're also providing a supplementary excel file on our website to more easily aid in this reconciliation.
Both the Powerpoint, an excel file or now accessible on the web site. 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.
Thanks, Arren Hello, everyone and thank you for joining us today for Glu second quarter 2019 earnings calls I will provide an overview of the quarter's highlights in our game development progress and Eric will then discuss the quarter's financial results and our guidance in more detail, we reported solid financial results in the second quarter. There were inline with our expectations. We produced our largest bookings quarter ever of 101.9 million with strong profitability on an adjusted EBITDA basis, and the second consecutive quarter of GAAP profitability.
We launched two new titles WWD universe, and diner Dash Adventures and made significant progress in developing our pipeline of potential growth games.
We also made several strategic decisions that will reduce our full year 2019 guidance, but will strengthen our position to generate improved results in 2020, specifically the strong performance we've seen from diner Dash adventures increases our confidence that it will be a growth game. Therefore, we will continue to support that expected growth as higher levels of you a investment.
W. W. We has not yet reached the target metrics, we anticipated we continue to work on enhancing the game to improve its K P eyes to a level that warrants scale you weigh spend.
We're making meaningful progress on Disney Sorcerers Arena. However, we have updated its launch to Q1 2020 to give the team more time to perfect. The game that said, we will launch the game earlier, if the capesize indicate that is ready for worldwide launch.
And looking at the second quarter results, our three growth games or three growth games collectively grew 12% year over year design home grew bookings, 11% year over year to 42.3 million, representing the seventh straight quarter of double digit growth on a year over year basis. We introduced NUMETA features that include additional homes in house progression, you social layers and internationalization in select European markets as we look to the second half of the year, we expect growth to be driven by increased met expansion additional social features internationalization and ecommerce, which has rolled out and limited beta in the second quarter.
As the quarter progressed, we also saw improvement in the UAE landscape with lower Cpis and higher quality installs.
[noise] covet fashion, which just celebrated six year anniversary grew 11% year over year to 14.4 million. This growth was driven by its most successful summer series launch ever a new merchandising strategies, including Propshop of popular new feature that allows players to style their models with a wide range of accessories.
Our tap sports baseball franchise increased bookings, 15% year over year to a record 28.1 million and a seasonally strong quarter, we saw increased conversion and monetization due to enhance advance and merchandising, reflecting the expertise and strong execution of the team.
Wwb Universe, which launched on May 20, Eightth offers the most authentic ww experience and mobile to date, allowing players to build and trained dream rosters to do battle against other wrestlers as we do with all our life titles. We are continuing to introduce new features and enhanced live ops to maximize the game is potential our plan with WWF can you continue shifting are you weigh investment dollars to higher ROI opportunities as we update the game.
[noise] diner Dash Adventures launched successfully on June 20th this title is a re imagination of our das IP for the modern age of casual mobile games utilizing a proven core mechanic, we know our fans love with the addition of an extremely deep decorative and customization met again that will continue to expand it evolve over time.
Diner Dash Adventures has produced strong retention conversion and monetization and we believe it will be a growth game dash is a wholly owned glu IP, providing higher margin flow through stacking and other growth game, which has been our stated strategy strategy. Since 2017 is one more reason why we're excited about 2020.
Looking ahead, we are extremely bullish about our strong development pipeline first an update on Disney our creative team is making considerable progress on Dizzy sources Arena and we are encouraged by the positive trends we have seen in most in the most recent update. This includes new features like club Wars refresh.
Challenges enhanced social features a streamlined user flow and a more balanced economy, but we have made steady progress insane improves kb eyes, we believe the game needs additional polishing before worldwide relates to maximize the opportunity of launching a top tier growth game.
We also continue development of three previously announced original IP titles in our pipeline. This includes the next generation of our Deer Hunter franchise launching in 2020, which combines an iconic blue IP with deep Mehta, social game plan event, driven live ops. Additionally, we have made solid progress on development of our narrative game originals as well as our next cried Crowdstar title.
Finally, we have we made a small but strategic ACO higher to our Glu Sports studio you recently welcome to talented Orlando based team that we believe is a great cultural fit we see the sports genre as a growing area in mobile gaming and believe the Glu is well positioned to take advantage of this opportunity with our category knowledge experience and proven performance. This team will work under the glue sports brand to advance a prototype with the full support of our central infrastructure. We believe this process is repeatable and we will continue to look for nimble high quality teams a share a passion for making great games. We are excited to add the Atlanta team to our Glu Sports brand, which includes WWD universe, and the tap sports baseball and Deer Hunter franchises.
In summary, we had a good first half of 2018 with increased profitability on an adjusted EBITDA basis, and significant free cash flow generation driven by solid year over year bookings growth. Most importantly, we launched diner Dash adventures. The first game developed under our new prototype and strategy and are exciting that is exhibiting the early indicators of a growth game.
While I am disappointed that we're lowering our guidance this year I believe the taking the extra time to get our games right sets us up for continued growth and is strongly aligned with long term shareholder value.
We believe we will enter 2020 in a stronger position than we entered 2019, we expect our existing growth games will continue to grow next year as we will have meaningfully updated the medi game and design home installed key new features and covet fashion and strengthen our Glu sports portfolio diner Dash adventures will contribute a full year of bookings in 2020, and we believe the launches of Disney sources Arena and our new version of Deer, Hunter will add two significant growth gains to our portfolio.
Thats.
This sets us up a robust 2020.
With stacking bookings and positions us for a significantly improved financial results.
Eric will now provide specific details on our financials and outlook.
Great. Thank you Nick and good afternoon, everyone. The call I will provide a closer look at our financial results for the second quarter and then go through guidance for both the third and fourth quarters in detail, which will roll up to our full year 2019 guidance.
Let's first look at our Q2 results, where we delivered record bookings GAAP net income and strong adjusted EBITDA profitability revenue was $95.5 million, a 6% increase over the comparable quarter last year.
Bookings reached an all time high of $101.9 million, a 3% increase over last years second quarter.
64% of bookings came from royalty free Glu, IP titles and bookings from ads were $12.9 million or 13% of total bookings.
And we reported a $2.5 million net income this is the second consecutive quarter of GAAP profitability.
The year over year bookings growth was led by our three growth gains, which grew 12% and could contributed 83% of total bookings.
On a year over year basis design home bookings increased 11% to $42.3 million. The tap sports baseball franchise was up 15% to $28.1 million and covet fashion grew 11% to $14.4 million.
W. W. E Universe launched on May 20, Eightth and generated $1.8 million in the quarter and diner Dash Adventures, which launched late in late June contributed $1.5 million for 10 days.
On the expense side adjusted platform commissions were 26.7 million adjusted royalties were 7.3 million with hosting costs of $1.8 million.
You weigh in marketing spend was $30.1 million compared to $25.3 million last year.
On a year over year basis for the second quarter, you and marketing as a percent of bookings increased from 25% to 30% as a result of the two new title launches.
I want to provide an update on the CPI pressure as we discussed on our last earnings call for design home and Covet fashion Cpis peaked in April and since then we have seen declines each month.
Our full year guidance assumes user acquisition ROI levels remained steady to current levels for both of these growth games, while cpis have improved since April they remain modestly higher than 2018 levels.
Operating expenses, excluding $30.1 million of you weigh in marketing costs were $28 million down $1.5 million on a year over year basis.
And our GAAP net income was $2.5 million or two cents per share.
Turning to our expectations for the back half of 2019. There are several factors that are contributing to our guidance revisions.
First we only expect a modest contribution from Debbie.
As I stated in early June at the Baird Conference. This title is not exhibiting sufficient LTV to justify scaled spend on new way.
As a result, we significantly reduced our spend our guidance for this title has been reduced to the current bookings run rates for the balance of the year.
We will continue to evaluate new product updates and will resume investing on user acquisition, if and when the capesize improved to enable ROI positive spend.
Second we are moving all bookings for our Disney titles due to the new launch timing of Q1 2020.
Third we are seeing a steeper reduction in bookings from our catalog games games, which have limited live ops and no events are you a spend we're seeing players in dollars migrate to the larger games, including our own growth games and away from older declining catalog titles. This accelerated decline is essentially pulling in from next year, a degradation that was expected due to occur.
And finally, we've shifted increased our you may spend on diner Dash adventures, giving the compelling growth opportunity, which has resulted in an increase in booking guidance for this title.
Now let me provide a more detailed look at our guidance for the second half of the year.
We expect bookings to grow year over year in the third and fourth quarters with a sequential increase in Q3 due to the strength of diner Dash ventures.
With respect to profitability due to our strategic you a investment in Q3 to support diner Dash ventures, we expect to deliver a low single digit adjusted EBITDA profit in the third quarter.
This you a investment is similar to the successful strategy, we implemented for design home starting in May of 2017, when we took advantage of a great window, a positive ROI spend which drove design home to record bookings.
Adjusted EBITDA in the fourth quarter on a sequential basis is expected to rebound significantly due to lower you a span resulting from the holiday competitive season.
You wait for the fourth quarter in absolute dollars will look more closely like that of the first quarter of 2019.
For the third quarter guidance, we expect bookings in the range of 110 million to $112 million, a 10% increase at the midpoint on a year over year basis.
This would be a new all time record quarter by a significant margin.
On the expense side and at the midpoint of bookings guidance, we expect adjusted commissions of $29.6 million.
Adjusted royalties of $6.7 million and hosting costs of $1.6 million.
You a cost will be approximately 7.1 million higher in the third quarter as compared to the second quarter due to our ramp on diner Dash adventures and as such you a marketing costs will be 33% of bookings.
All other adjusted operating expenses are forecasted to be 32.5 million.
For the fourth quarter, we expect bookings in the range of 101.5 to 103.5 million a slight increase over last year's fourth quarter at the midpoint from Q3 to Q4, we anticipate a sequential step down due to expected tap sports baseball seasonality, excluding tap sports baseball bookings are expected to be flat from Q3 to Q4, we provided a detailed outlook in the IR deck and press release on the fourth quarter guidance for modeling purposes.
For the full year 2019, our revised bookings guidance is in the range of 406 million to $410 million, representing 6% year over year growth at the midpoint.
This updated guidance is a $42 million reduction at the midpoint I want to provide a detailed bridge from last quarter's full midpoint guidance of 450 down to formulate today.
We are forecasting a 6 million dollar increase over prior assumption some diner dash adventures due to its strong performance in our heavy investment in UAE during the third and fourth quarters.
We are reducing our bookings guidance, a combined $33 million from W. of deed and Disney W.W. He is being lowered to its current bookings run rate, while designing is being moved out of the year completely for guidance purposes. We are also not forecasting any bookings from titles in development or beta.
And last $15 million the guidance reduction is a result of our catalog titles declining.
We have always expected our catalog of older titles, mainly Kim Kardashian, Hollywood cooking Dash, Gordon Ramsay Dash and deer Hunter to trade down due to the fact that we are doing lower touch live ops and are not running events, nor spending on user acquisition. This trend accelerated this year across the industry as players in dollars shifted towards large live ops driven titles, including our three growth games. Our two largest catalog titles are royalty bearing titles and as a result, the overall impact is not as significant to margins.
To summarize our revised guidance, our $408 billion at the midpoint is comprised of our three growth games design home covet fashion and tap sports baseball growing 15% on a year over year basis to $329 million. This strong growth is despite the fact that we had significant headwinds and the banishment of pay per engagement offers on one of our channel partners that we talked about last quarter. Most of these reduced our upside for the year. Our catalog is declining 43% from $98 million in 2018 down to $56 million or 2019.
I would point out that for the full year, our catalog will be less than 14% of total bookings and our Q4 2019 run rate will be less than 8% due to expected continued declines throughout the year.
Thus as we enter 2020, our catalog will be largely immaterial the guidance.
And our new titles, primarily diner Dash adventures will generate $23 million for the year.
On a go forward basis, we are adjusting our guidance philosophy regarding new titles. We will not include bookings from new title launches until after the game is launched globally.
We feel this is a prudent approach to reduce guidance volatility and increase our forecast precision.
On the expense side for the full year at the midpoint of our guidance range. We expect adjusted platform commissions of 107.4 million adjusted royalties of $24.9 million and hosting costs of 6.5 million.
USA and marketing costs expected to be $114.1 million or 28% of total bookings with all other adjusted operating expenses at 124.2.
We expect the full year 2009 to be GAAP profitable.
We ended the second quarter with a cash balance of $99.5 million and no debt.
As the year progressed, as we anticipate generating strong free cash flow and expect to end the year with approximately 115 million of cash. This is down from our prior guidance due to our reduction in expected adjusted EBITDA profitability as well as the fact that our strong fourth quarter EBITDA becomes free cash flow in the first quarter of 2020.
We believe that we are going to make we believe we remain on track with the margin targets. We have discussed in the past of an adjusted EBITDA margin of 15%, 20%, if and when we achieved bookings of $500 million.
Please note that this range is largely dependent upon the bookings mix of license IP against royalty free Glu IP titles.
We expect additional margin expansion, if and when booking skills about $500 million.
The three freight the three freight phase plan, we laid out in early 2017 is still firmly in place and we are committed to our strategy of developing growth games that can stack bookings and deliver growing profits over time.
I am encouraged that we believe we have launched a growth came with diner dash ventures, and we will continue to invest in it accordingly.
While we are disappointed with the need to provide financing guidance, we believe that giving our teams have time to maximize the opportunity for our titles to become additional drivers of our growth portfolio is the right decision for shareholders and for Glu long term.
With our current three growth games, plus diner Dash debentures, we believe that 2020 will be a strong year with the anticipated new releases highlighted by Disney Sourcers Arena, and our new deer Hunter title.
We will now open the call for questions operator.
Ladies and gentlemen, if you have questions at this time.
Press Star then the number one kind of telephone keypad.
Our first question comes from the line of drew Crum from Stifel. Your line is open.
Okay and then so.
With one Q earnings you reduced expectations for growth gains by 10 million plus.
Equally but you're assuming that the time that the pressures you are seeing on new wave would continue through the balance of the year sounds like Thats, a beta to some degree of why no change and.
The bookings guidance for the growth titles.
Yes, so drew.
Back in February we had given guidance of $420 million.
Which was the combination of our core business of both growth games and our catalog and then we added $20 million in February largely due to diner dash, so roughly about $15 million from diner dash at about $5 million from W. E. We then came in said the May earnings call and did a reduction on the core business, mainly from the UAE headwinds and the pay per engagement band that we saw an apple that checkout.
Hi single day high double digit teens of bookings on the core business and then we added $30 million of bookings for the combination of W. E and Disney we thought that WD is looking good coming into that earnings call eminent dizzying, we had the anticipated August launch.
And then now as I mentioned on the call, but going from 450, and we've got a reduction on the catalog, which is part of the core business, but the the core business is coming down from the catalog due to this kind of acceleration that we saw and then weve, obviously pushed out Disney and reduce for WD each at the current run rates.
Okay. Okay fair enough and then this basic question on the Disney Pixar gain for Nick I do believe the one Q release stated enough time.
Yes, Andrew.
Obviously, we've debated this long and hard over the last couple of weeks as we talked about the potential move to Q1.
We are seeing really good things happening in the game, but it is a massive massive and deep economy very very deep met a game and there just is more polished work. We don't believe there's fundamental changes. Therefore, we are confident we can make that day and as mentioned if things if things really go well. The capesize continued room at the rate. We're seeing there is a chance we will launch it early we just want to commit to that which is why we are saying.
Where we're saying Q1.
We just released a big update with five BOE and that included club Wars, which is a very social feature.
UPB.
We've got an improve home screen lots of changes to the challenges new social features a lot more balanced economy. The next the next update which we call six so we'll have some merchandising improvements in semicon rebalancing and making sure the club system works really well.
Few improvements to the to the to the battle formations and such but these are all things that we think we've got our hands around and will lead us to the the Q on lot. So yes bottom line is we feel good about that we just don't want to have it in this year and given kind of missed misleading guidance. When we're trying to create some of this for the long term, yes, and just as a follow up to your question.
Part part of this.
W E challenge.
We've now adjusted our philosophy around new titles and including them in guidance, so kind of the bit of a which saw that we saw this year of going up in May and then now down if we'd have this philosophy. This year would not have happened at all and these would be insulated. So they tend to have less guidance volatility and more forecast precision.
Until we launch new title in the future our guidance will not include new titles.
Okay. Thanks, guys.
All right. Thanks drew.
Our next question comes from the line of Doug Crudes.
Cowen.
Line is open.
Yes, you guys.
We have given a lot of numbers on their call. So first if I could just.
I think I can.
With some math here it sounds like you have now diner dash and your guidance for 21 million and W. W. 2 million is that right.
That's correct yes.
Okay.
You know when you guys.
Gave guidance a quarter ago, presumably you were already seeing some of the degradation in the catalogue, but you didnt call. It out then.
Did something change in the last three months or is this just the case is it the time you felt like with Disney coming but you could also weakness there and now you don't and I need to call. It out can you can you give us more color on sort of the.
The step through in the guidance processor.
Yes, sure I mean, yes, we certainly if you go back to Q1 2018 to Q2 2018, our catalog good take a big step function down.
And then it kind of flattened out for Q2, three and four.
This this year, we saw that down in <unk>.
As we've been getting to kind of July we've seen kind of continued trends. So we're not really expecting that the catalog was going to have a flat.
Flat basis from Q2 to three to four just similar from last year. So that's kind of point number one.
Midpoint of our two certainly when we had confidence a quarter ago by Wwb.
Well, we certainly thought we had some offsetting components with these new titles. So I think as we as WV came out of the gates and did not have the LTV, maybe what we saw in beta did not become reality in the mud the live launch and we got surprised there and so that was kind of a pretty big surprise and that obviously offset some of this weakness that we.
We're seeing elsewhere.
Okay. Thank you.
Our next question comes from the line of Mike Hickey from the Benchmark Company. Your line is open.
[noise].
Mike We can't hear you.
Well, you're right we've got to go to Jeff right now we've got it yeah.
I had the mute on their so what could happen before thanks for taking my questions.
Covet fashion, good year over year growth it looks like sequentially it.
He showed a little weakness, obviously, you're going to see it be comping here. This continues to be a growth and could you just explain.
Or maybe I missed it in your prepared remarks that why you're seeing a little sequential weakness in covet fashion. Then can you on an individual game basis or guide Q3 expectations a sequential.
Basis, which is I'm kind of fashion in baseball Baseball's flat performed very well excuse me last year could you just sort of curious how Q3 s in take shape and why we saw sequential declining both fashion.
Yeah sure Mike Yeah. So a couple of fashion in Q2 is typically we see the summer slowdown from mothers going having kids back to the holiday from the holidays and vacation. So we typically see that so that's kinda number one and number two.
We had a partnership with Disney further Disney princesses throughout the the last nine or so months and that came to an end as well. So I think those those combinations is why covet fashion kind of came down from a very very strong Q1, and actually a record Q1.
<unk> record quarterly bookings in three record high days in Q1 really on the backs of three very very strong Disney performances, and then in Q2 I. We came off of that problem and then in terms of our Q Q2 to Q3 bookings, it's really coming on the backs of obviously diner dash diner dash growing.
We've got a tiny amount of growth from from design home and flatness really from coverage and then baseball will take a slight downtick as it as it typically does from Q2 to Q3, and that's kind of that the rounding out of the entire forecast.
Okay. That's helpful. And then on you made a little acquisition that's interesting curious how big that team is.
If they came within the I P.
And I guess more importantly, how you think about sort of building out the sports piece.
Mr Sounds like you want to do so serious question, yes, you're looking at bookings and when.
Yeah, we're not going to give really any specific color on the timing or the sport that they're going after obviously, it's going to be in the outdoor slash sports Arena, that's why they're playing into that group, we're very bullish on the possibilities of building greater diversity and breadth in this forward slash outdoor area. We think we can strive towards you know really building a brand that's meaningful given how successful test sports baseball has been in the space and we found a team that we were introduced to that just really fits us culturally and logistically. So we acquired them. They do not come with an IP per se, but they've got an idea that they're going to be developing out it's very small team.
So it's very cost effective right now, but they're working at a rapid doing rapid iteration on this idea and they will plug nicely into our sports group and leverage the infrastructure centrally in order to really accelerate that prototype and we'll then take a look at it and if we feel great about it well funded more and continue with it but we really like these guys are very talented very experienced like I said, the great cultural connect with Glu and the Blue Sports group and we're just extremely bullish about this sector for glu in the future and we think this is a really great add for us.
Cool Thanks, Nick.
Last question.
From me, obviously deer Hunter, it's coming in 20, I think you may have said that you might.
Start testing.
In Maine, Ti if I remember correctly.
Curious I guess how backing is.
Taking shape.
And also I was wondering I mean, obviously deer Hunter has been a massive success in terms of download monetization, but it's never really proven out.
To be a growth gains so curious sort of what you're doing.
Yes that came to make it consistently perform over the years.
Yeah, you're absolutely right in the last call we talked about getting this into beta at the end of this year. That's still the intent of course as we've learned we need to be somewhat valuable around and flexible around dates but right now it is on track for that and on track for launch next year.
We're not going to say anything more on timing.
But we feel really good about this and you're absolutely right about the fact that it is not proven out to be a growth game and we believe that because it's because it's never had a mehta game attached to it as it's been a great.
Core mechanic.
And a a a core loop that works incredibly well and provides a really wide funnel for users to come in and Thats. One of the reasons why it had such such an enormous downloads over the years, we're trying to take that and combine it with this data that the baseball studio. The glue sports group really has a deep understanding of kind of merged those together and create a meaningful growth game and we think this has potential to be a top tier growth came for us and something that's really meaningful inside the the marketplace. Because it has all those attributes really wide funnel. It's got a great brand name has got a proven core loop that people love, where improving kind of the look and feel of it and really adding a deep deep RPG met a game and elder game that is really the component thats going to drive the LTV, we combine that with what we believe will be reasonable to low cpis and we think we've got a we've got a winter so lots of execution to do we've got a great team working on it.
Feel good about the progress feel good about the timing right now and as we get closer we will definitely be giving more color and more detail on how it's come together.
Awesome all right. Thanks, Nick the chemicals, all right. Thanks, a lot Mike.
The next question comes from the line of Jeff Cohen from Stephens. Your line is open.
Hey, guys. Thanks for taking my question I, just wanted to dig in a bit more on the decision to push our Disney how do you give investors comfort that they're not going to see a repeat of what's happened with W.W. you were kind of it looks ready in soft launch and then it then it isn't.
Have maybe you or the michelson team ever worked on games in the past that have been significantly delayed and then come out to be successful.
Yes, great Great question, and I'd say the number one reason why we are delaying it has specifically so we don't have a situation like we'd have a W. W. We were we had some some really good numbers, but it really wasn't a scaled a scaled audience and then we fell short and while we have.
Like open competence at the W. W. W team can recover and it's incredibly talented group so we feel.
We feel like there is a path there for Ww way, we want to be absolutely sure before we really launched Disney.
Because this is again thats going to have tremendous marketing support across the board not just on device, but lots of other marketing support. So we really want to make sure. It's right and we believe giving ourselves. This extra time is is the prudent and smart move and definitely the calculated move to increase the chances of delivering again, what we view as a top tier growth game that and deer Hunter are the two that we feel that can really be at the top of our.
Of the glue charts.
The team to answer your question has worked on games that are delayed I would say that pretty much everyone. In the industry is work on delayed games I've been a part of many it's unfortunately, a natural part of the process and while we don't take light of it we take this very seriously and are certainly disappointed that we had to move it out of the year. Our view, Jeff is that by moving it out we increased the chances of creating something thats going to be around for multiple years and that's really what we're after so our view is what will take the short term pain and we will work through this and we'll work through and our processes and the way we communicate.
New games in development in order to increase the odds of creating more gross gains at stack on top of our original three and now hopefully DDIY diner dash debentures. So we create a more diverse broad pool of growth games, which is just really healthy for glu going forward. So bottom line is just we just think it's a smart long term move despite the pain for us and for investors in the short term.
Thanks, Nick and then I guess for Oh, sorry.
Can you just touch on how much diner dash is cannibalizing your existing cash games and maybe how much that is affecting the catalog weakness.
Yes, Jeff it's a good question I mean, there certainly is some diner some cannibalization from cooking dash in Ramsay dash, but we did pull off highway spend so it's a combination of some cannibalization and we just chose not to invest in new way in the three months, leading up to the launch so that we didnt have users that we needed to port over the metrics and the monetization and conversion on diner Dash debentures is step head to head and shoulders above what we saw in either of those other two titles and obviously Ramsay dash has a royalty on that as well. So it did not make sense for us to spend on your way to then try to transfer those uses over we kind of let the.
The the the pump get primes in anticipation for the diner Dash ventures global launch.
Great. Thanks, Eric.
Last question comes from the line of Darren Aftahi from Roth capital.
Glenn is open.
Hi, This is Dylan on for Doug Thanks for taking my question.
First of all I appreciate some of the color on guidance the puts and takes of what's going on there but on some of the growth gains are you still seeing from solid growth across this quarter three games.
Are you able to sort of quantify.
How big of an impact some of those recent medi game updates has had on design home and sort of what your expectations are that can keep design home at these growth rates are better going forward.
Yes, I'll take that.
So design home has as you know has been our largest growth game it's been.
A real mover for us and.
While we have experienced some flatness last quarter, we talked about with the way landscape. We started to see improvement there. So that just just kind of covers what the what the kind of user acquisition side is like in terms of the game itself lots of things going on that was going to take longer than than than you want but thats because its tremendous complexity and depth going in.
To these features and systems that the team is working on everyday key things are the internationalization. So we felt that design home just punch is below its weight class compared its peers in Europe , and we think we've just got a real opportunity to create localized content and live ops and events and user acquisition targeting in select European markets and that will roll out from there so thats going on.
Of course, we are continue to add to the Mehta, we've got new homes going in a townhouse, which I believe is the fourth house going and as part of the Medi game is we'll be in shortly adding replay ability around the goal system. So lots of wrapping the Mets game and honestly. This is just going to go on for years I mean, we're just in the early innings of what we're doing in terms of the depth and what the team's doing and then social systems, which is probably a little more of a 2020 driver, but we're excited about the opportunity to create more social connect.
For the the many players who are playing this game. So bottom line with design home is that were starting to see an improvement in the user acquisition landscape and we are definitely seeing.
A team that is really coming together with regards to deepening the matter game and taken this to new marketplaces and building and social over time. So we're very bullish on this it's been growing every every quarter and we believe that's the very much the future of design.
Great. Thank you.
And then on.
Diner Dash adventure I think you mentioned you added 6 million in incremental bookings for that came in here in the second half.
Is that based on sort of.
How strong the game's been relative to expectations for the first I guess month and a half and that's been out or are you seeing those trends continue in here in Threeq you for the first month, just sort of what's giving you that confidence there.
Yes, John Yes, we added $6 million for the back half from our guidance from $15 million to $21 million and that was really based on the strength that we've seen call from June 20, if all the way through yesterday.
And that's why we've also been investing on user acquisition at a higher level and I would point out that we've seen something like this before back in May of 2017, we decided to consciously.
Ramp up you ate spend on design home and that really paid off getting that title to a whole another base camp and a new level of growth and that's what our expectation is we really believe the diner Dash adventures has the potential to become a fourth growth game for us into 2020, and we want to really stacked the deck in our favor by doing everything we can as early as possible and that's what we're doing right now in the third quarter.
Got it thank you.
And then last last one for me on some of the U.A. changes with your ability to ER.
Just sort of wondering how quickly inflexible are you with that you a spend just given some of the dynamics have gone gone on over the past.
Two quarters and sort of what's the lag time between if you see one of these gains outperforming or underperforming and how quickly you can sort of re reallocate that spend.
Yes, well, it's almost immediately the good thing about user acquisition here at Glu is everything is 100% variable and the things we look for our one what are the current CVI is the cost per install so on the cost side and we're evaluating every every day every week as we spend at this level of spend and then we've as we ramp it up what it what does that curve look like of the CP is spending goes up or goes down that's number one and number two we're constantly looking at each titles day, one and day seven we call. It our revenue per install and when you've got games that have been live for a long time you look at the day one to day 365. The days seven today 365 to Canada extrapolation as to how the titles actually do in reality and so as we look at fresh users.
And that day, one and day seven what's the revenue looking like are the revenues on this cohort this week trending up or down versus last week versus last month versus last year and based on that data we reallocate budgets.
On a weekly basis. So we we may go into the quarter with a fixed number of budget dollars, but every single week. We are reallocating that based on last weeks in last month's CVI trends RPC trends et cetera.
Thank you.
Thanks, selling stone.
I would like to turn the call back to Nick Earl Companys CEO .
Great. Thank you operator, thanks, everyone for joining us and we'll talk to you next quarter.
Thank you.
Hi, gentlemen.
This concludes today's conference.
Thank you for your participation and have a wonderful day given all that's good.