Zynga beats Q2 revenue projections but net loss rises
Zynga has reported a 41% year-on-year increase in revenue for the second quarter of 2019, driven by a record-breaking performance in the mobile channel.
Total revenue for the three months to 30 June, 2019 amounted to $306.5m (£252.6m/€276.1m), or $26m above the top end of Zynga’s quarterly guidance. Bookings for the quarter were up 61% from the prior year, to $376m.
The vast majority of revenue came from gaming, which accounted for $240.7m - or 79% - of the total, with advertising responsible for the remaining $65.8m.
Mobile was the star performer, following a 49% year-on-year increase in revenue for the channel. It now accounts for 94% of Zynga’s income, up from 89% in Q2 2018.
Looking at Zynga’s social casino products, its core Zynga Poker saw mobile revenue remain flat quarter-over-quarter, and down 22% year-on-year. The game was enhanced with the launch of a new Boosts feature during the quarter, with Zynga confident that it will return to growth in the second half of the year.
Its Social Slots division, meanwhile, was hit by a decline in legacy titles, with revenue falling 6% in Q2. This was offset in part by the launch of Game of Thrones Slots Casino (pictured), a tie-in to the popular TV series, which went live from 30 May. It is said to be performing well in its early stages.
Hit it Rich! Slots also performed well, with mobile revenue up 13% in the quarter, the title’s best performance in three years as a result of new features such as Weekly Race and Collections to boost player engagement.
Total expenses were up 67% to $377.7m. Revenue-related costs rose to $126.9m, and research and development expenditure was up to $102.1m, but the biggest rise was in sales and marketing, which more than doubled to $113.5m.
This resulted in an operating loss of $61.2m for the quarter, significantly up from a $3.0m loss in the prior year. After interest-related benefits and a $2.8m income tax benefit, Zynga’s net profit for the quarter stood at $55.8m, compared to a $911,000 loss in Q2 2018.
For the first half of the year, to 30 June, Zynga revenue was up 35% to $571.9m, comprising $440.9m from gaming and $131.0m from advertising. Expenses for the period increased 83% to $774.8m, resulting in a $202.9m operating loss.
After finance-related income and expenses, net loss for the quarter stood at $184.7m, compared to a $4.7m loss in H1 2018.
“We delivered strong Q2 results, ahead of our guidance, and finished the first half of 2019 with momentum across all aspects of our multi-year growth strategy,” Zynga said.
Looking ahead to Q3, Zynga expects to see revenue reach $325m, a $92m - or 39% - year-on-year increase. As a result of strong revenue growth, full-year guidance has been revised upwards to $1.2bn, with bookings guidance revised to $1.5bn.
“We remain on track to deliver our best annual revenue since 2012 and the highest bookings in Zynga history,” the company said.
“It is an incredibly exciting time for Zynga. By executing our multi-year growth strategy, we are positioned to be one of the fastest growing public gaming companies in 2019.”