POKER

Zynga stalwarts Words With Friends & Poker responsible for positive Q4 results

TAGs: Zynga, Zynga poker

The social gaming provider, Zynga, dragged in positive Q4 financials thanks to an emphasis on a few cult classics.

Zynga stalwarts Words With Friends & Poker responsible for positive Q4 resultsHands up if you used to ransack your parent’s bedroom searching for Christmas presents?

My hand is up.

It was always a fun time, finding your yet to be wrapped presents alongside the confusion of finding those long cylindrical tubes that vibrated and those strange magazines containing women pulling their giblets apart preparing for the coming of a baby.

Why were they smiling?

Surely childbirth hurts?

One year, when rooting around in my next door neighbours house we found a black bag full of presents. Unfortunately, they were already wrapped. My mate’s parents had left the sellotape and wrapping paper next to the bag, so we decided to open them all and rewrap them.

My mate had a Commodore 64 (he was rich), and one of his presents was a game called Vegas Jackpot. We took it out of the box and replaced it with one of his old games and wrapped it up. It was November. We played with that game non-stop, and his parents were none the wiser.

So when you look at an enterprise like Zynga and think who on earth wants to play casino and poker games for virtual currency, there is a market even if it is comprised of ten-year-olds.

Of course, I am pulling your plonker.

The mobile and social gaming giant Zynga is a giant because they attract a broader audience than ten-year-olds. And to prove that point they did rather well during their Q4 results.

Zynga do Rather Well in Their Q4 Results

Zynga’s finance department did a decent job of forecasting Q4 results. The outlook for GAAP revenue was $180-$190m, and the final haul came in at $190,540m representing a 3% year-on-year (Y/Y) increase and a 4% quarter-on-quarter (Q/Q) increase.

The cost cutters didn’t have as fruitful a time as the revenue generators with operating expenditure (OPEX) coming in at $162.4m, down 9% Y/Y and 2% Q/Q.

Bookings (the term used to describe the sale of virtual goods) was forecast to earn $185-$195m, and the tills rang in at $201,532m, representing an 11% increase Y/Y and 2% Q/Q.

Adjusted EBITDA came in below forecast. The finance team told the CEO to expect something in between the $12-14m range, and the eventual number was $10,584m

Moving on to the 2016 summary and Zynga earned $741.1m in revenue, down $23.3m (3%) on their 2015 numbers. Bookings of $754.5m were up $54.5m (8%). Adjusted EBITDA was $48.8m, down $33m (40%).

Moving onto Mobile Growth for 2016 and revenue was $154.7m, an increase of 20% Y/Y and 6% Q/Q, and represented 81% of overall revenue. Bookings via Mobile were $167.1m, up 25% Y/Y or 3% Q/Q, representing 83% of overall bookings.

The Old Favourites

When Zynga drafted Electronic Arts stalwart, Frank Gibeau, as CEO last March, he made it pretty clear that he would focus attention on the old classics: Words With Friends and Zynga Poker.

Zynga Poker is ten years old, but that didn’t stop the game creating a new Mobile Bookings record with growth registered at 44% Y/Y and 29% Q/Q. Revenue obtained through poker was up 44% Y/Y, representing 20% of online gaming revenue for Q4.

Words With Friends is eight years old, but that didn’t stop the mobile Scrabble derivative creating revenue that was 32% higher than this time last year.

The total amount of online gaming revenue for Q4 was $140m. Online slots grabbed 34% of that pie, FarmVille took 20%, Zynga Poker 20%, and the rest divided between new games such as CSR Racing 2.

Looking at 2016 numbers, Zynga created $547m through online gaming revenue with Slots taking 33%, Farmville 22%, Zynga Poker 19%, and the best of the rest taking 26%.

The Look Ahead

The Zynga finance team expect revenue of $185m, Adjusted EBITDA of $14m, and Bookings of $190m in Q1, 2017.

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