Zynga’s second-quarter loss of US$22.8m may impact Facebook

26 Jul 2012

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Zynga CEO Mark Pincus

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Zynga, the creator of web-based social games such as FarmVille, has seen a loss US$22.8m on revenue of US$332m in the second quarter, a result that could impact social network Facebook, which relies on the game publisher for about 15pc of its revenue.

Facebook reports its financial results later today.

"We saw declines in engagement and bookings for our web games due in part to changes Facebook made to their platform," USA Today reported Zynga CEO and founder Mark Pincus as having said on a conference call.

Pincus was referring to changes to Facebook’s algorithm, which Zynga said led users to discover new games rather than return to playing Zynga’s games.

Zynga had been the darling of social gaming, having stormed to popularity with titles such as Mafia Wars and CityVille on Facebook, but the company has been facing mounting pressure as social gaming shifts to mobile and the sector becomes more competitive.

In Q2 2011, Zynga had reaped a profit of US$1.4m.

Even though the number of Zynga’s daily active users increased by 23pc to 72m in the second quarter, Zynga earned fewer revenue per subscriber. Average daily bookings per user shrank to US4.6 cents in the quarter, a decrease of about 10pc.

Shares in Zynga fell 35pc to as low as US$3 in after-hours trading, from a close of US$5.078 on NASDAQ.

Stock in Facebook slid nearly 7pc to US$27.33, from a close on NASDAQ of US$29.34.

Tina held senior editorial positions at daily newspapers in Ottawa and Toronto

editorial@siliconrepublic.com