Zynga Announces Third Quarter Results, Confirms Layoffs
Zynga is a mess. The company’s share price has plummeted into unknown depths and now trades at around $2.13. Can Zynga pick itself back up and become profitable again? Let’s take a look at its third quarter results and see if there’s any hope left.
Zynga announced its third quarter results today and it’s not looking super great. The social game maker’s pulled in revenue of $317 million for the quarter which is only a three percent increase year-over-year. Its third quarter bookings were at $256 million, down 11 percent year-over-year.
“While the last several months have been challenging for us, Zynga remains well positioned to capitalize on the growth of social gaming. 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,” said Mark Pincus, CEO and Founder, Zynga.
Zynga confirmed the lay offs in its financial results by saying that it has enacted a cost reduction plan that should save the company anywhere between $15 and $20 million during the fourth quarter. Approximately 150 employees were laid off as part of the plan while certain facilities were consolidated.
To hopefully boost their share price up by a bit, Zynga announced that the company has the board’s approval to repurchase $200 million in outstanding Class A common stock. There’s no date set for when the repurchase will go down, but it will probably be sooner than later.
In some good news, Zynga’s games have been getting more players lately. The company said that its daily active users have increased from 54 million to 60 million total in the third quarter. Monthly active users have likewise increased from 227 million to 311 million players.
Those active daily and monthly payers don’t mean anything, however, unless they’re paying. That’s where Zynga has been hurting and continue to hurt into the third quarter as its monthly unique payers have decreased from 4.1 million to 3 million. Draw Something is blamed as the main culprit behind the dwindling payer base.
Zynga’s results aren’t that promising, but the market at least seems to be somewhat happy. The company share value has already increased by 0.30 points (14 percent) in after-hours trading. We’ll see if it can continue that momentum going into tomorrow morning’s trading.