Zynga sees jump in second quarter profits
Zynga’s second quarter saw the company record another period of encouraging operating results and finalize moves to increase its cash assets paving the way for new acquisitions.
The company’s sales for the June quarter came in significantly ahead of management’s $280 million target, and its net loss for the period arrived significantly lower than management’s target for a loss of $70 million. Second-quarter bookings also beat the company’s guidance for bookings of $360 million.
The weakest part of the video game developer’s earnings release was its unimpressive daily active user (DAU) growth and a decline for monthly active users (MAUs) compared with the prior-year period. However, these trends appear less concerning in light of increases for the company’s full-year bookings and revenue guidance and confirmation that additional acquisitions are likely on the way.
Zynga’s DAUs grew just 1% year over year and its MAUs declined 10% year over year despite the addition of games Empires & Puzzles and Merge Dragons! as performance drivers.
The relatively uninspiring DAU and MAU numbers stemmed from declines for legacy franchises Zynga Poker and Words With Friends. However, Zynga Poker performed ahead of company expectations, Words With Friends posted its best-ever second-quarter revenue on mobile, and overall results combined with some promising business moves overshadow the less-than-thrilling user stats.
Sales for the quarter were up 41% year over year, and bookings for the period were up 61%. Operating cash flow hit $99 million, up 140% year-over-year and representing the company’s best performance since the fourth quarter of 2011.
The company delivered record bookings for the quarter, aided by Empires & Puzzles and Merge Dragons! — games brought into the fold by recent acquisitions. However, other Zynga franchises like Words With Friends, CSR2, Zynga Poker, and Hit It Rich! Slotscontinued to perform relatively well and were solid contributors in the quarter.
The company’s advertising segment posted record second-quarter performance, climbing 26% year over year to deliver revenue of $66 million.
The company launched Game of Thrones Slots Casino in May and reported strong early results and a favorable outlook for the title. It also released Tiny Royale on Snap’s Snapchat-based gaming platform.