Zynga relief despite Q1 losses

Zynga relief despite Q1 losses

Thursday, May 7, 2015 Totally Gaming
Mark Pincus has revealed Zynga's focus for the rest of 2015

Social gaming company Zynga has finally given shareholders some good news after posting better-than-expected Q1 results. 

The Farmville creator still posted a loss, but it was an improvement on the deficit of Q1 2014 and comes just weeks after the controversial decision to reappoint Mark Pincus as chief executive. 

Shares in Zynga were up 11 per cent yesterday (Wednesday) on the news that losses in the first quarter were a negative figure of $46.5m (€46.9m), an improvement on the $61.2m that was lost in Q1 2014.

Zynga’s revenue in the three-month period was also up 9 per cent from $168m last year to $183.3m in the opening quarter of 2015. The firm also noted that adjusted earnings before interest, tax, depreciation and amortisation fell from $13.8m last year to just $2.1m in the first quarter of this year.

“Zynga remains focused on our mission of connecting the world through games, which is even more relevant and possible today,” said Pincus. 

“Our execution is focused in three areas - our products, where we're backing proven teams against the most valuable game categories; our people, to foster creative entrepreneurs; and our plan in order to fund our future with focus and simplicity.”

Zynga has also announced a new cost reduction plan that it says could help it generate pre-tax savings of approximately $100m.

Under the plan, Zynga expects to complete a reduction of approximately 18 per cent of its workforce by the fourth quarter of this year and that combined with a reduction in centralised services and spend should save approximately $55m.

“For our people, we need to create an empowered, entrepreneurial culture that fosters more creativity and innovation," Pincus said.

"Over the years we've seen that tighter, more nimble teams can drive faster innovation and deliver more player value. We are reducing our workforce by 364 people or approximately 18 per cent, decreasing our outside services and reducing our central functions.

“This was a hard but necessary decision and I believe this plan puts us in the best long-term position for success.”

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