Zynga convinced everyone that they had the the magic formula for repetitive success in online casual gaming. Obviously, they did not. I think that they will have long term success with their casino efforts.
Zynga Reports Third Quarter Revenue Of $317M, Shares Pop 12.7% In After-Hours On Casino Push
Kim-Mai Cutler
TechCrunch
October 24, 2012
Zynga said it saw third quarter revenue of $317 million, which was slightly above the lower range of $300 million to $305 million the company said it would see earlier this month. Bookings came in at $256 million, up 11 percent year-over-year. The company saw a loss of 7 cents per share, and its non-GAAP earnings, which exclude one-off share based compensation costs, were 0 cents per share.
The company’s shares popped 10 percent in after-hours trading to $2.36 from today’s close of $2.12 on news that Zynga is finally getting into real casino gaming. Zynga said it was partnering with bwin.party, a real money gaming operator, to offer real online poker and casino games in the U.K.
The report also comes just a day after the company engaged in cost-cutting with lay offs for about 5 percent of its workforce. The company decided to eliminate the Boston office and said it’s considering closing its U.K. and Japanese studios.
The company foreshadowed these earnings earlier this month when it said it expected to report revenue between $300 million to $305 million and bookings between $250 million to $255 million for the third quarter. Bookings are what players pay for upfront, while revenues divide that figure over a longer period of time since players might not actually use their virtual purchases until later.
The company added that it would see a non-GAAP net loss between $2 million and $5 million, which excludes one-off share-based compensation expenses that would drive the GAAP net loss to between $90 million and 105 million. GAAP refers to financial figures that are in line with generally accepted accounting principles.
Zynga had to downgrade its earnings expectations because of poorer-than-expected performances from The Ville and Draw Something, the game it acquired in the $180 million OMGPOP deal. The company also said that it expected to see bookings for the year come in at between $1.085 billion to $1.100 billion (down from previous estimates of between $1.150 billion to $1.225 billion).
Zynga’s shares have fallen from a peak of $15.91 earlier this year to a current $2.12 as the company hasn’t been able to diversify its business away from Facebook enough to satisfy investors. At the same time, a number of higher-level ranking executives have left either because they vested and saw other opportunities in and outside of gaming or because they weren’t a good cultural fit with the company.
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