Zynga ahead of Q1 expectations despite $61m net loss
San Francisco-based company records 36% year-on-year revenue fall but predicts net loss to widen in Q2
Social gaming operator Zynga has exceeded market expectations after recording Q1 revenues of US$168m, but it couldn’t prevent the firm from posting a net loss of $61m during the quarter.
The company’s casino business had a positive three months with Zynga Poker achieving quarter-on-quarter bookings growth for the first time in nearly two years, while its audience on mobile also grew 19%.
But revenues for the three months ended 31 March decreased 36% year-on-year from $230m in Q1 2013, although bookings of $161m and adjusted EBITDA of $14m outperformed the high end of Zynga’s outlook range.
The company’s $61m net loss, which is expected to widen to between $65m and $75m, follows a profit of $4m during the same period last year and comes after the company announced in January it was to cut around 300 jobs in an attempt to cut costs.
Player numbers also declined sharply compared to the same period last year with MAU falling 51% year-on-year to 123m and DAU 46% to 28m.
“In Q1 our teams delivered a solid start to the year against our strategic frame of growing and sustaining our franchises, creating new hits and driving efficiencies,” Don Mattrick, Zynga CEO, said. “We have established a strong base for 2014 and believe we are pacing well for a year of growth.”
“We believe these indicators demonstrate our strategy is working and the focus, rigor and discipline of our teams is showing up in our results,” Mattrick added.
Last quarter the San Francisco-based firm completed the acquisition of UK-based mobile game and technology developer NaturalMotion for US$527m as part of a move to ramp up its mobile business.
Zynga also launched FarmVille 2: Country Escape on iOS and Android, as well as a slot based on the game via its Hit It Rich! app on Facebook.
“Since the launch, we have seen more than 4 million installs of the game and received great feedback from our players,” Mattrick said. “We are pleased with the team’s execution and encouraged by the early indicators we are seeing.”
A mobile-optimised version of Zynga Poker is expected to be unveiled this quarter with an overhauled design, increased personalisation and new social elements.
The results also revealed that Zynga co-founder Mark Pincus is to relinquish the last of his operational duties next Wednesday to take on advisory role.