Social gamers Zynga are branching out into the world of professional sports-themed games but the big news in Thursday’s quarterly report was the lower than expected sale of virtual goods, which sent the stock down sharply in after-hours trading. Revenue in the three months ending June 30 fell one-third to $153.2m while adjusted earnings nearly doubled to $14m. However, Zynga recorded a net loss of $62.5m in Q2 compared to a $16m loss in the same period last year.
Zynga’s online game revenue fell 36% to $131m while advertising revenue fell 19% to $22m. Farmville 2 and Zynga Poker remain the company’s chief monetary engines, respectively responsible for 32% and 24% of gaming revenue. However, the company announced that the revamped version of Zynga Poker would be delayed until late this year or early 2015.
Bookings – the sale of virtual goods via Zynga games – slipped nearly 7% year-on-year to $175m, although that figure was up 9% over Q1 2014. Average daily bookings per daily average user (DAU) rose to 6.7¢ from 5.3¢ a year ago but the ranks of DAU fell by over a quarter to 29m over that time frame. Monthly active users (MAU) fell 30% year-on-year to 130m but rose 6% sequentially, while monthly unique users (MUU) fell 27% year-on-year to 89m but rose 2% sequentially.
Mobile monthly active users rose 34% year-on-year and mobile’s share of bookings topped 50%, up from 36% in Q1 and representing the first time mobile has accounted for more the majority of bookings.
While most of the numbers are down year-on-year, all categories have rebounded slightly from Q4 2013, which may have represented the company’s nadir. Regardless, Zynga was forced to revise its full-year outlook, cutting about $85m off its projected bookings and between $30m to $40m off its full year earnings.
In a bid to expand its user base, Zynga announced it has entered into multi-year licensing deals with the National Football League and golfer Tiger Woods, which will allow Zynga to enter the sports category via a new franchise brand, Zynga Sports 365. Thursday witnessed the launch of Zynga’s new NFL Showdown game in select markets. The Tiger golf product is still in development and isn’t expected to launch until next year. Zynga is also expanding into the endless runner game category and has struck a licensing deal with Warner Bros. to incorporate Looney Tunes cartoon characters.
