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October 25, 2012

Zynga releases third quarter results and 2012 outlook

The social gaming company reported a net loss of $52.7m.

By Tineka Smith

Zyngas Q3 revenue of $316.6m is an increase of 3% year-over-year compared to Q3 2011.

Online game revenues totalled $285.6m, a decrease of $2.3m from Q3 2011 and a 2% decrease from Q2 2012.

Advertising revenue, however, increased by 64% when compared to Q3 2011, totalling $31.1m for Q3 2012.

The company reported bookings of $256m which is down 11% year-over-year when compared to the same quarter last year.

Zynga’s net loss for Q3 2012 was $52.7m compared to a net income of $12.5m for the third quarter in 2011.

The company says net loss for the third quarter included an impairment charge of $95.5 connected with their purchase of OMGPOP and another $37.8m came from stock-based expense.

"While the last several months have been challenging for us, Zynga remains well positioned to capitalize on the growth of social gaming," said Mark Pincus, Zynga CEO. "We’re implementing a number of steps to drive long-term growth and profitability. The successful launches of FarmVille 2 and ChefVille in the third quarter demonstrate that when we develop great games, our large player audience engages. It’s more clear than ever that along with search, shop, and share, play is a fundamental pillar of the Internet, and Zynga continues to be the leader."

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Zynga announced it has formed a cost reduction plan which should generate $15m -$20m in pre tax savings for the fourth quarter.

The company is also cutting 5% of its current workforce as well as reducing its technology and marketing spending.

The social gaming company’s 2012 outlook projects that booking swill be in the range of $1.09bn to $1.1bn with Adjusted EBITDA projected to range from $152m to $162m.

Please follow this author on Twitter @Tineka_S or comment below.

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