Zynga Hits Q3 Revenue Of $317 Million, Getting Into Real Casino Gaming, Buying Back $200 Million In Shares

Zynga has reported Q3 revenue of $317 million, which is above the lower range of $300-$305 million that the company was predicting that they would see earlier this month.  Bookings were at around $256 million, which is up 11% year-over-year.

“We failed to meet our own growth expectations,” stated Zynga CEO Mark Pincus in an earnings call. “We’re taking a series of steps to drive long-term growth and profitability.” Pincus said two factors contributed to Zynga’s weaker-than-expected performance: poor execution in launching new games and in dealing with the faster-than-expected transition to mobile platforms.

Zynga also announced during the call that they are getting into real casino gaming.  Zynga is partnering with a company called bwin.party, which is a real money gaming operation.  bwin.party offers real online poker and casino games in the United Kingdom.  Zynga cannot really offer real money casino gaming in the United States because of regulations, but online gambling is a multi-billion opportunity in international markets.

A couple of days ago, we wrote about how Zynga was laying off 100 employees and is shutting down offices in Chicago, Boston, and Austin.  Zynga is also strongly considering shutting down their U.K. and Japanese offices.  These moves would save the company around $15-$20 million this quarter before $8-$12 million in restructuring charges.  The cuts would save around $60-$80 million per year.

Zynga LogoZynga’s Cityville and Castleville saw the most player declines and the company was unable to fill up their pipeline once again. Zynga said that their network of mobile gamers reaches around 30% of U.S. smartphone users and sees around 10 billion minutes per month of play.  Mobile games are now accounting for 20% of the company’s total bookings.

Zynga is buying back $200 million in shares, which covers around 10% of the company’s outstanding stock.  Unfortunately the company had to downgrade their earnings expectations earlier this month because of poor performances from The Ville series of games and Draw Something.

The good news for the company is that Farmville 2 attracted 500,000 unique players and 60 million monthly active users.  Zynga also signed up a good number of third-party developers for their platform like Sava Transmedia, RocketPlay, 50 Cubes, and Row Sham Bow.

“We had a major breakthrough with Farmville 2,” Pincus said. “We showed that we could bring a terrific 3D game to a mass market in a browser for free with a terrific design around it.”

Zynga had reiterated an earlier forecast for the bookings of $1.09 billion to $1.1 billion.


This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at
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