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Zynga quarterly sales slide 34%

Zynga quarterly sales slide 34%

Thu 07 Aug 2014 8:42pm GMT / 4:42pm EDT / 1:42pm PDT
BusinessFinancialSocial

Social publisher posts $62.5 million loss, lowers outlook; Mattrick says "we aspire to do better"

Zynga today reported results for the quarter ended June 30, revealing declining revenues and deepening losses. In the process, the company also lowered its outlook for the full year.

For the second quarter, Zynga posted revenues of $153.2 million, down 34 percent year-over-year. The company also saw a net loss of $62.5 million, compared to the previous second quarter's loss of $15.8 million. On a non-GAAP basis, Zynga reported bookings down almost 7 percent to $175.1 million, with a non-GAAP net income of $2.8 million, as opposed to the $6.1 million non-GAAP net loss it reported for last year's second quarter.

"While our quarterly financial results were in line with our guidance range, we aspire to do better and improve execution across our business," Zynga CEO Don Mattrick said. "Inside Zynga, we recognize that our products have the potential to live for multiple years and with nurturing, refinement and investment, they can grow and scale. We are purposefully competing, and while we would like to be further along, we believe we are making the right decisions to grow our business and unlock long term shareholder value."

The results convinced Zynga to downgrade its outlook for the full year, as it now projects bookings of $695-$725 million, down from $770-$810 million. Meanwhile, Zynga expects its full-year non-GAAP earnings per share to be flat to down a penny, compared to the previous guidance of up one to three cents.

On the plus side, Zynga's daily active users, monthly active users, monthly unique payers, and monthly unique users were all up quarter-over-quarter. However, all of those metrics were down significantly year-over-year.

Zynga shares were down nearly 8 percent as of this writing to $2.69 in after-hours trading.

9 Comments

Steve Wetz Reviewer/Assistant Editor, Gamer's Glance

213 529 2.5
Popular Comment
Hmmm, Zynga sees a net loss of $62.5 mil, but pays its CEO nearly $60 mil...

I wonder where they can make up the loss.

Posted:3 months ago

#1

Thomas Glen President & Co-Founder, ValorCon LLC

4 11 2.8
What are "bookings" in this context?

Posted:3 months ago

#2

Neow Shau Jin Studying Bachelor in Computer Science, Universiti Sains Malaysia

52 81 1.6
@Thomas

I assume that was referring to their gambling business?

Posted:3 months ago

#3
they dont need to ever do games to be profitabe :)

Posted:3 months ago

#4

Aleksi Ranta Product Manager - Hardware

288 138 0.5
CEO's and their pay packages are a strange beast indeed. One would think that pay is something for services rendered with bonuses for good execution and going over targets. But in todays day and age, a CEO cannot possibly fail with regards to their pay. If you fail your compensation is good, if you succeed you get even more.

I would love to read about a CEO that decided to start with a small, but decent salary, and have the trust in his gut feeling, and himself that "Yes, i will turn this company round. i will commit to this company for the foreseeable future. I will turn this around. i will make myself irreplacable". And WHEN he has turned to boat around, THEN get paid millions FOR SERVICES RENDERED.

But one can only dream.

Posted:3 months ago

#5

Andrew Goodchild Studying development, Train2Game

1,254 421 0.3
@Aleksi, although there's plenty I don't like about Steve Jobs, I would say his $1 base salary did that and then some.

Posted:3 months ago

#6

Todd Weidner Founder, Big Daddy Game Studio

420 998 2.4
If you want to tie CEO's pay to performance, fine but dont tie it to some BS number which can be manipulated easily like stock price, or earnings or some bottom line account crap. Tie it to top line numbers like revenue, etc.. Of course they would never go for that because that would mean they would have to be competent, and most are clearly not even close to competent.

Posted:3 months ago

#7

Matt Jeffries Senior Producer, Telstra

19 19 1.0
Many CEOs in the US take the "$1" Jobs salary option, but still the whole CEO remumeration system seems broken to me. If you tie it to revenue then they can manipulate pricing and marketing to supercharge revenue even when their costs are exploding at the same time. If you tie it to stock price then they can try and implement strategies to boost the stock price in the short term at the expense of the long term health of the business. Same for earning, with accounting smoke and mirrors. I don't know the answer but linking CEO renumeration to any "performance" metric apart from actual real sustainable profit seems destined to be open to manipulation.

And @Thomas et al, "bookings" are what Zynga refer to as the sale of virtual goods across all their games, not just their gambling income. Here is how Zynga explains Bookings in its S-1: Bookings is a non-GAAP financial measure that we (Zynga) define as the total amount of revenue from the sale of virtual goods in our online games and advertising that would have been recognized in a period if we recognized all revenue immediately at the time of the sale

Posted:3 months ago

#8

Shane Sweeney Academic

400 416 1.0
Well Mark Pincus was also on a $1 salary.

Don Mattrick as the new CEO is a pretty interesting choice especially considering the Kinect was his baby as was the Xbox One launch which both to some degree could be considered failures. I'm sure he is a great leader and his track record at EA is very good but with the recent failed launch of the Xbox did the Zynga board really think he deserves to be the 8th most highest paid CEO in the world?

Posted:3 months ago

#9

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