Zynga reports Q3 losses, hires new COO to turn fortunes around

25 Oct 2013

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The foyer at Zynga's San Francisco, California, headquarters. Image via Zynga

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Social and mobile games maker Zynga has reported its third-quarter financial results, which show decreases in revenue and user numbers. However, the company has hired games-industry veteran Clive Downie as chief operating officer (COO) to help get it back on form.

Zynga, the San Francisco, California-headquartered company, which is probably best known for the social game FarmVille on Facebook, reported third-quarter revenue of US$203m, down 36pc year-over-year, and bookings of US$152m, down 40pc year-over-year. It was a better outcome than analysts had been predicting, though – about US$13m more than forecast.

Zynga also reported a net loss of US$68,000 and adjusted EBITDA of US$7m for the third quarter, and earnings per share of US$0.00.

Despite its number of daily active users of its social games falling by 49pc year-over-year, Zynga remains upbeat about its future. It expects to be profitable on an adjusted EBITDA basis for the full year 2013.

In June, Zynga announced it would be laying off 18pc of its workforce – around 520 people – as the company plotted a restructure to transform it from a web company into more of a social and multiplayer operation.

Then, in July, Zynga appointed Don Mattrick as CEO, replacing Mark Pincus, who was appointed as a director of the company. Since that restructure, Pincus has continued to serve as chairman of the board and chief product officer of the company.

Zynga looks ahead

Mattrick said he was "pleased" with Zynga’s performance for the third quarter. He said the results had "exceeded" the company’s guidance both in terms of bookings and adjusted EBITDA.

"We are encouraged to see sightlines to growth," said Mattrick.

Zynga’s teams, he said, are working hard to compete "more aggressively" on the web, to move to mobile and develop new hits.

"I am happy with the early progress we have made."

Mattrick believes some of the company’s main franchises, Zynga Poker, FarmVille and Words With Friends can be "evergreen" in terms of consumer interest.

"We are focused on growing these franchises in fiscal year 2014," he said.

New COO at Zynga

Zynga’s new COO has worked with Mattrick in the past at Electronic Arts. Downie will take up his new position on 4 November.

Downie has more than 20 years of industry experience across console and free-to-play mobile games, and a history of leading teams and publishing global game franchises and services.

"I have known Clive for more than two decades and am pleased to welcome him to the team," said Mattrick.

Describing Downie as a "seasoned leader" with a rich understanding of consumer, marketing and mobile engagement, Mattrick said Downie will bring international experience operating both in EMEA and Japan and a background in game publishing to the Zynga table.

All of this experience would be "incredibly valuable" as Zynga transits to mobile, Mattrick explained.

Social gamers drop off dramatically, but Zynga targets mobile for turnaround

In terms of its gaming drive, for web platforms, Zynga launched new titles during the third quarter of 2013. These included Fairy Tale Twist, Ninja Kingdom, and Hit it Rich.

For mobile platforms, Zynga launched 1 Word (KiK Messenger app) and CastleVille Legends. In addition, Zynga also released New Scramble with Friends, Baseball Slam (3P), and CityVille KRE-O.

"I am confident that Zynga is rewiring itself in a meaningful way that will strengthen the core of our business and put us back on track to achieve significant long-term growth and profits," Mattrick added.

Carmel was a long-time reporter with Siliconrepublic.com

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