Zynga predicts Q2 decline after posting Q1 profit
Social gaming operator posts first quarterly profit since listing despite Zynga Poker showing decline
Zynga has posted its first quarterly profit since becoming a public company in December 2011, but has also seen revenues and player numbers fall and Zynga poker showing “sequential decline” in the period.
The operator posted net income of US$4m, compared to losses of $85m for the equivalent period last year. This marked the company’s return to profit after posting a full year net loss of $209m in its 2012 results, released in February.
However, the three months ending 31 March 2013 saw revenues fall 18% to $264m, down from $321m from Q1 2012. The period also saw a decline in bookings, which fell 30% year-on-year to $230m, while daily active users fell by a fifth to 52m, down from 62m in the first three months of 2012. Revenue was derived predominantly from in-game revenues of $230m, with advertising contributing just $34m “ up 21% year-on-year but down 8% quarter-on-quarter.
COO David Ko said Zynga Poker had experienced “sequential decline” in first quarter bookings online. He explained that a number of instances of credit card fraud had occurred in the app and actions taken by Zynga and Facebook to correct this had further impacted web bookings. However, he added that the company had “dealt with similar threats in the past” and did not expect to see lasting decline.
While the operator released its first-ever real-money gambling products, ZyngaPlusPoker and ZyngaPlusCasino, earlier this month, it did not break out any figures for the channel. It described the launch as “the first step” towards realising the company’s “long-term vision of bringing players the next generation of real-money games on multiple platforms in regulated markets.”
Online gaming operators polled by eGaming Review earlier this month said they did not view Zynga as a threat in real money gaming at this time.
Commenting on the results Zynga chief executive Mark Pincus pledged to continue to “invest in developing the leading franchises and network across web and mobile platforms” to offer its 253m MAU “a connected experience”. He also praised the performance of its FarmVille franchise, but warned that 2013 would prove to be a second “transition[al] year” as the company continued its shift to cross-platform development.
As a result of this transition Zynga has warned that losses will once again rise in the second quarter of 2013, in the range of $26.5m to $36.5m, while admitting that the decline in revenues is expected to continue. The company has projected total earnings of between $225 and $235m for the three months ending 30 June, with Pincus predicting “uneven, non-linear results.”
Mobile, mentioned by Pincus as Zynga’s key growth opportunity in February’s full year results for 2012, continued to be the company’s main focus, CFO Mark Vranesh added. Bookings on the channel rose 22% year-on-year, despite DAU remaining flat “ something which the operator will address with the launch of a number of titles in Q2.