) announced its Q4 2012 and FY 2012 results on February 5. The
company benefited from successful promotions for games while
cutting costs. The social gaming giant shut down offices in Boston
and Japan and also expects to close its U.K. studios. Revenue for
Q4 was $311 million, flat y-o-y, even as full year revenues were up
by 12% at $1.28 billion. The net loss in Q4 was $48.6 million, down
89% y-o-y while full year net loss came in at $209 million.
Zynga is still the largest social gaming company in the world
with about 30o million monthly active users of which nearly 72
million users are purely mobile users, a demographic it plans to
target in 2013. The company generates most of its revenue from
in-game virtual goods sales and advertising on multiple platforms
like Facebook, Google+, iOS, Android and others. Zynga competes
primarily with Electronic Arts (
), Playdom, which was recently acquired by Disney (
) and other independent social gaming studios.
Below we highlight some of the key developments and what to
expect from the company in the near future.
Check out our complete analysis of Zynga
Zynga's New Games Managed To Increase User
Despite a challenging quarter, the company managed to
successfully leverage its FarmVille franchise with FarmVille 2. In
2012, FarmVille surpassed $1 billion in total player purchases,
inclusive of partner fees. In Q4, FarmVille 2 surpassed $100
million in gross bookings, and the company plans to roll out this
franchise on mobile platforms in 2013.
Mobile, Core And Real-Money Gaming To Drive Revenues In
Zynga dominates the social casino scene across all web and
mobile platforms, and Zynga Poker grew to 37 million monthly active
users in Q4. The company plans to introduce games such as Elite
Slots in 2013 to beef up its casino gaming franchise. It also plans
to launch real money casino games in U.K. in the first half of
2013. The fourth quarter also saw the release of multi-player
poker tournaments which has led to more user engagement.
Zynga also plans to introduce mid-core games in 2013 in a bid to
keep users engaged for longer periods of time. A mid-core game
tries to combine the engagement level of a core game with the
learning curve of a casual game to provide an engaging gaming
experience to a larger user base. This can potentially allow for
retention of a large user base while promoting in-game purchases as
the games are designed to be more engaging and users are likely to
pay to upgrade rather than drop off once the free-play scenarios
Outlook For Q1 2013
The company expects lower bookings in Q1 2013. Itexpects
bookings between $200 - $210 million, down sequentially from Q4,
mainly due to slower new releases in a bid to control its game
portfolio. The company also expects Q1 adjusted EBITDA between -$10
million and breakeven. GAAP revenue is expected to be between $255
- $265 million with a net loss between $12 - $32 million.
We have a
Trefis price estimate for Zynga
, which stands 10% above its market price. We expect Zynga's new
platform and gaming network, and online gambling initiatives to
account for much of its future earnings potential.
Understand How a Company's Products Impact its Stock
Price at Trefis