Zynga beats Q3 revenue projections despite social casino struggles

Zynga beats Q3 revenue projections despite social casino struggles

Thursday, November 1, 2018 Posted by News Team
Finance
Company to develop social slot based on Game of Thrones through HBO deal

Zynga has reported a 4% year-on-year increase in revenue for the third quarter of the year, with revenue of $233.2m beating the company’s revenue guidance for the period by $15.2m.

Total bookings for the quarter (customer spend on virtual goods) were up 17% at $248.9m. 

The quarter represented Zynga’s best-ever mobile performance in terms of revenue and bookings,  with revenue up 9% to $212.5m, and bookings rising 23% to $229.9m. 

The channel now represents 91% of total revenue, up from 87% in Q3 2017, and 92% of total bookings. 

This growth came despite the previously key Zynga Poker and Social Slots franchises having challenging quarters. Zynga Poker posted a 3% decline in mobile revenue, but matched its best mobile bookings quarter in the franchise’s history. 

Zynga chief financial officer Gerard Griffin said the franchise had been impacted more than most by platform changes made by Facebook in the second quarter of the year, with the franchise also hit by adjustments to its in-game economy. During the end of the quarter Zynga launched its World Poker Tour game variant, offering faster-paced tournament play, a wider range of stakes and higher in-game rewards. 

This had increased engagement, Zynga said, and the company plans to introduce additional WPT-themed events and tournament models in coming quarters. 

Social Slots, meanwhile, posted a 9% decline in mobile revenue, with mobile bookings falling 4% year-on-year. This was due to Zynga shifting its focus to creating deeper player experiences within core titles.

Zynga has also announced a partnership with HBO to develop titles based on the smash-hit fantasy series Game of Thrones, with the first - a social slot - to be launched in the second half of 2019. 

Advertising revenue for the quarter climbed 41% to $65.4m, a new revenue record for the vertical, with bookings up 44% at $65.4m. Zynga said that this was driven by increased player engagement and advertising network optimisations. As a result of this growth, the advertising business now represents 28% of group revenue, up from 21% form Q3 2017.

Adjusted EBITDA for the quarter was $38m, down 6.6% year-on-year, though this beat Zynga’s guidance by $22m, with the company having lowered projections to account for investment in new product launches. 

Expenses for the quarter rose 4% to $228.5m, with the operator posting a net profit of $10.2m, up from a $911,000 loss for the previous year. 

Looking ahead, Zynga expects to benefit from the launch of new branded titles, including products based on popular franchises such as Star Wars and Harry Potter, as well as Game of Thrones. 

The roll out of the branded titles are expected to increase operating expenses in 2019 and beyond, before boosting the company’s bottom line from 2020 onwards.

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