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Zynga the first season of 2019 net losses of $129 million


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Zynga reported Q1 net losses of $129 million, more than double its previous guidance of $59 million. So why have analysts and investors just lost their minds over Zynga stock? The flip side is that the company has — paradoxically — lost money due to its new acquisitions performing way better than expected — specifically, Merge Dragons and Empires & Puzzles — which has required Zynga to pay out one-off performance bonuses to the games’ creators and former owners. But the new games have boosted Zynga’s bottom line: revenue was up by 27 percent for the quarter to $265 million, while mobile revenue increased 35 percent to $246 million and now accounts for 93 percent of Zynga’s business.

Zynga's turnaround is continuing apace -- even if its first-quarter earnings results look mixed at first glance. Sales for the period came in well ahead of the $240 million target that the company established for the period, but on the bottom line, losses more than doubled the $59 million guidance that management previously provided. The good news is that the bolder-than-expected red ink actually stemmed from bonuses Zynga paid for the strong performance of recently acquired titles. If you are in lack of Zynga Poker Chips, visit our site 777chips.com, a reliable and cheap online in-game currency store.

Countering the significantly increased revenue and bookings comes to a much larger loss than previously expected. With a guidance of a net loss of $59 million, Zynga blew past this with a loss of $129m. However, the cause of this loss was a direct result of the outperformance of recent acquisitions. Specifically, Merge Dragons! from Gram Games and Empires & Puzzles from Small Giant Games, resulting in bonus payments of $86 million rather than the $10m expected.

Zynga expects a return to growth for Zynga Poker in the second half of the year, aided by the introduction of its World Poker Tour Themes ‘Spin and Win’ feature. While its social slots portfolio was also down, 3 percent on last year, the company said it believes its new Game of Thrones-themed slot will enhance engagement. The game is currently undergoing testing — although, with just three weeks left of a series that has spanned eight years and 69 episodes, you have to question the timing.

 

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