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Facebook: Q1 game revenue up 12%, Zynga down 37%

Facebook: Q1 game revenue up 12%, Zynga down 37%

Wed 01 May 2013 10:41pm GMT / 6:41pm EDT / 3:41pm PDT
MobileBusinessOnlineFinancial

Zuckerberg says Zynga's “growth hasn't been as awesome as everyone had hoped”

Facebook had a solid first quarter for 2013, and games were part of the growth despite a drop in revenue from Zynga. On today's earnings call, COO Sheryl Sandberg noted that first quarter total revenue was $1.458 billion. Net income was $219 million on a GAAP basis, and $312 million non-GAAP. There was good growth from ad revenue, and game usage increased despite a significant drop by Zynga. Facebook recorded 665 million daily active users (DAU) in March, up 26 percent over last year, with 1.11 billion monthly active users (MAU) up 23 percent.

"Our growth is particularly strong from new small and medium-sized marketers, direct response marketers, and app developers," said Sandberg. In Q1 mobile was 30 percent of Facebook's ad revenues, up from 23 percent in Q4. "We offer developers a unique opportunity to drive downloads of their mobile apps. During the quarter 3800 developers used that to drive nearly 25 million downloads. Of the top 100 grossing apps on both iOS and Android in the last week of Q1, about 40 percent of them used our mobile app install ads. In gaming, travel, e-commerce and financial service industries, the early indicator is that our cost per install is highly competitive."

"With the exception of our largest partner, Zynga, whose growth hasn't been as awesome as everyone had hoped, the rest of the community is actually growing quite well and is quite healthy"

Mark Zuckerberg

"Payments revenue from games was up 12 percent," said CFO David Ebersman. "We believe 6 percent represents the best apples-to-apples comparison in terms of the increase for payments from games if we adjust for items such as the Q4 change in revenue recognition timing. We're pleased that Q1 represented our largest three month quarter of games revenue to date, despite a 37 percent drop in year over year payments volume from our largest developer, as our other developers increased their payments volumes by almost 60 percent and we saw a record number of people playing games on Facebook."

"Games revenue in Q1 benefited from the growth of games launched in the past year, and also from our efforts to increase game distribution, usage, and payments conversion. We believe Facebook continues to offer a compelling platform for developers to build great games and businesses, and we will continue to invest in this area."

When a question came from an analyst about Facebook's platform strategy the lessons the company has learned, CEO Mark Zuckerberg responded: "One thing that I think has actually gone well with platform recently is the gaming ecosystem. With the exception of our largest partner, Zynga, whose growth hasn't been as awesome as everyone had hoped, the rest of the community is actually growing quite well and is quite healthy. We're pretty happy with that, and it's a pretty diverse group. We're up to 81 of the top-grossing 100 iOS apps, and 70 of the top-grossing Android apps are connected in with Facebook, so we're getting good coverage."

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