Zynga Beats Expectations In Q2 With $200M In Revenue, Fails To Stem User Exodus
Zynga today beat analyst expectations for revenue and earnings, but its user numbers continued to decline, sending the stock down about 1 percent in extended trading.
Zynga’s daily active user numbers declined 23 percent year over year to 21 million, which were also down 15 percent quarter-over-quarter. Its monthly active users also fell 32 percent to 83 million, down 18 percent sequentially. In the first quarter, the company had 100 million monthly active users, and 25 million daily active users.
This is still to be sort of expected. Zynga is still in the midst of a turnaround, with co-founder Mark Pincus taking the reins once more earlier this year. Zynga’s slots franchises were a strong point in the quarter, where bookings rose more than 247 percent year-over-year and rose 32 percent quarter-over-quarter. The company also signed a deal with Warner Bros to license Willy Wonka and the Chocolate Factory, which means we can probably expect a slots version of that in the near future.
Zynga reported $199.9 million in revenue, up 30 percent year-over-year, and a loss of 1 cent per share. Analysts were expecting a loss of 2 cents per share on revenue of $153.2 million in the second quarter this year. The company said it’s projecting to be in the range of $175 million to $190 million in the third quarter this year, with analysts expecting $174.8 million in revenue for the same quarter.
And of course, running a gaming company is difficult — especially in 2015, when viral hits are usually the games that drive huge businesses, such as Candy Crush Saga propelling King to being one of the biggest game companies in the world. Even King, however, is not immune to the ebb and flow of the gaming industry, with its revenue in the first quarter shrinking slightly year-over-year. King reported revenue of $569.8 in the first quarter this year, compared to $607.6 in the first quarter last year.
Zynga, like King, rode the success of huge hits like FarmVille and CityVille to becoming one of the largest gaming companies in the world. But other momentary viral hits — like 2048 and Kim Kardashian: Hollywood (which have also faded from popularity) — can steal the thunder of even those massive games. Still, Zynga’s core franchises — like FarmVille — saw a 4 percent increase in bookings quarter-over-quarter and a 9 percent increase year-over-year.
And then there are the layoffs. The last time the company reported earnings it said it would lay off around 18 percent of its staff, or 300 people. But they are hardly the only company facing layoffs, with Gree laying off 120 earlier this year and Kixeye laying off a chunk of its staff earlier this year.
Frank Gibeau, a longtime EA executive, is also joining Zynga’s board of directors. Gibeau left EA earlier this year where he served as head of mobile as most gaming companies faced the steep task of finding a way to capture an audience on mobile devices.
The company’s advertising business, interestingly, rose 70 percent from the same quarter last year to $38 million, up 7 percent quarter-over-quarter. Zynga’s stock has dropped more than 12 percent since the company’s last earnings report, ending the day down 2 percent. It fell as much as 9 percent in extended trading after the report came out.