Zynga ended the first quarter in the red. And this is with record earnings from mobile!
In early May, Zynga summed up the results of this year’s first fiscal quarter. The company reports revenue of $265 million. $246 million came from mobile. This is more than the company has ever earned in its history on mobile games. However, this happens against the background of financial losses.
Merge Dragons!Note: Zynga primarily uses two concepts in its financial statements — revenue and bookings.
Revenue is actually the money earned by the company. As for booking, it is a much more complex term. The company itself defines booking as follows: the total revenue from the sale of advertising and goods in games, which we would have fixed for the entire period if we had fixed all revenue at the time of the transaction.
In fact, booking is one of those metrics that is not taken into account by generally accepted accounting standards (GAAP). In part, it is similar to such a metric as consolidated revenue, which also takes into account deferred payments. However, Zynga itself does not put an equal sign between them.
Such metrics are introduced by public service companies to demonstrate to investors that the actual earnings turned out to be higher than the real one (companies may not receive money from subscriptions or from IAP immediately).
We do not take into account booking in the publication, which Zynga still defines vaguely, and we write directly only about revenue.
The main thing from the report
In January-March 2019, Zynga earned $265 million (annual growth of 25%). At the same time, the company did not make a profit, having gone into a big minus. Zynga lost $129 million in the quarter.
The reason for such large losses is not trivial. The company was not ready for the very high results of the recently acquired Merge Dragons! and Empires & Puzzles. Because of their good performance, Zynga decided to invest much more seriously in their promotion. As a result, traffic costs increased by $86 million.
Zynga Financial Results (1st quarter, 2019)
So overall, the company is very happy with the quarter.
She is sure that the money spent will multiply and return. And there are all the prerequisites for this.
- Merge Dragons revenue! in January-March, it increased by 91% compared to sales in the previous quarter (October-November 2018);
- Empires & Puzzles only joined the Zynga family of projects, but managed to break into the top 10 highest-grossing games on Google Play and the US App Store.
Despite the fact that Zynga is happy with Empires & Puzzles, the game is not yet among the top 5 most earning products of the company
In addition, other games of the company demonstrate good financial performance:
- CSR2 revenue increased by 27% compared to similar metrics a year earlier;
- Words With Friends showed a 41% increase in revenue in mobile compared to the figures for the first quarter of 2018.
The company’s advertising revenue has also grown significantly. In January-March, it amounted to $65 million. This is 45% more than a year ago.
Dynamics of Zynga advertising revenue
Despite the good financial performance, the company has grown its audience.
Moreover, its MAU has stagnated for at least the fourth quarter in a row. As a result of the latter, it amounted to 72 million, while a year ago it reached 82 million players.
The situation with the DAU, on the contrary, is now improving and has almost reached the level of the beginning of last year. The figure was 22 million users.
Cumulative dynamics of MAU and DAU of Zynga projects
Zynga management was so impressed with the results of the first fiscal quarter for 2019 that they made a new forecast.
Now she believes that she will earn $1.2 billion for the whole year. If this happens, it will be the most successful year for the company since 2012.
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