Zynga beats Q3 market expectations despite revenue drop
CEO Don Mattrick expects company to be profitable by the end of the year as losses fall to $68,000
Zynga has exceeded Q3 market expectations after reducing its net losses to US$68,000, with CEO Don Mattrick claiming the social gaming company will be profitable over the course of the full financial year.
According to its results for the three months ended 30 September, Zynga posted a net loss of $68,000, down from $52.7m during the same period last year.
Zynga also saw player numbers decline sharply compared to the same period last year with MAU falling 57% year-on-year to 97 million and DAU falling 49% year-on-year to 30 million. Total bookings fell from $256m in Q3 2012 to $152m in 2013 but beat the guidance range of $125m to $150m.
Despite beating market forecasts of $190m, revenues continued to slide after falling 36% year-on-year from $317m to $203m in Q3 2013.
Online game revenue fell to $174m, a 39% year-on-year decrease, and adjusted EBITDA also declined from $16m in Q3 2012 to $7m, but beat a guidance range of negative $30m.
A loss of two cents a share exceeded analyst predictions of four cents a share and caused the company’s share price to climb to 11.7% in after-hours trading yesterday.
Don Mattrick, who replaced founder Mark Pincus as CEO in July, said that despite continued revenue losses and a declining user-base, the San Francisco-based company was heading in the right direction.
“I am pleased with our Q3 performance which exceeded our guidance both in terms of bookings and adjusted EBITDA,” Mattrick said. “We are encouraged to see sightlines to growth and expect to be profitable for the full year on an adjusted EBITDA basis.”
In an analyst call following the results Mattrick added that he believed Zynga was “poised for growth in 2014″ and that it was “creating several new products that are in different stages of the development cycle.”
Since Mattrick took over as CEO, Zynga has since dropped its pursuit of a US real-money gaming (RMG) licence but will instead focus on free-to-play games, including its social casino offering, and continue to assess its RMG products in the UK.
Zynga has also seen a number of high-profile departures in recent months, including an extensive management shakeup, and according to the analyst call has cut 154 jobs quarter-on-quarter.
In addition to releasing its Q3 2013 results yesterday, Zynga announced the appointment of Clive Downie as its new chief operating officer following the departure of David Ko in August.