Zynga Reports Second Quarter 2013 Financial Results

I estimated Mafia Wars to be generating $15-$20 million last quarter. Not this quarter.

Zynga held it’s Q2 Conference Call today. ZNGA was on the upside through day trading and has plummeted to $3.05 per share as of 5:48 PM EDT in after hours trading.

Although the Conference Call revealed that FarmVille and FarmVille 2 are seemingly profitable;

FarmVille and FarmVille 2 combined bookings grew 29% year-over-year, continuing to demonstrate the power of Zynga's franchises.

 

Sorry Mafia Wars Players; Mafia Wars Generated Maybe $10 Million In Revenue

The rest of the Conference Call did not provide much in the way of good news. Revenue is down 31% year-over-year and bookings were down 38% year-over-year. Zynga’s net loss for Q2 2013 was $16 million.

 

July 25, 2013

Zynga Reports Second Quarter 2013 Financial Results

SAN FRANCISCO, July 25, 2013 (GLOBE NEWSWIRE) -- Zynga Inc. (Nasdaq:ZNGA), a leading provider of social game services, today announced financial results for the quarter ended June 30, 2013.

• Q2 2013 revenue of $231 million, down 31% year-over-year, and bookings of $188 million, down 38% year-over-year
• Q2 2013 net loss of $16 million and adjusted EBITDA of $8 million
• Q2 2013 GAAP EPS of ($0.02) and non-GAAP EPS of ($0.01)
• Implemented significant cost reductions resulting in a $25 million Q2 2013 restructuring charge with an expected annualized pre-tax cash savings ranging from $70 million - $80 million

Don Mattrick attempted to look to the  positive’s, the future.

"The next few years will be a time of phenomenal growth in our space and Zynga has incredible assets to take advantage of the market opportunity," said Don Mattrick, CEO, Zynga. "To do that, we need to get back to basics and take a longer term view on our products and business, develop more efficient processes and tighten up execution all across the company. We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters. I'm privileged to lead Zynga and I look forward to spending more time with our players, employees and shareholders."

 

But there are many obstacles to hurdle in Don’s vision of a Zyngatopia occurring anytime real soon. The DAU decreased from 72 million (Q2 2012) Daily Active Users to a mere 39 million in Q2 2013. That ‘s an astounding 45% decrease year-over-year. The Monthly Average Users fell 39% year-over-year from 306 million in Q2 2012 to 187 million.

• Daily active users (DAUs) decreased from 72 million in the second quarter of 2012 to 39 million in the second quarter of 2013, down 45% year-over-year. On a consecutive quarter basis, DAUs were down 24% from 52 million in the first quarter of 2013. Web DAUs and Mobile DAUs were 23 million and 16 million in the second quarter of 2013, respectively.
• Monthly active users (MAUs) decreased from 306 million in the second quarter of 2012 to 187 million in the second quarter of 2013, down 39% year-over-year. On a consecutive quarter basis, MAUs were down 26% from 253 million in the first quarter of 2013. Web MAUs and Mobile MAUs were 129 million and 57 million in the second quarter of 2013, respectively.
• Monthly unique users (MUUs) decreased from 192 million in the second quarter of 2012 to 123 million in the second quarter of 2013, down 36% year-over-year. On a consecutive quarter basis, MUUs were down 18% from 150 million in the first quarter of 2013.
• Average daily bookings per average DAU (ABPU) increased from $0.046 in the second quarter of 2012 to $0.053 in the second quarter of 2013, up 14% year-over-year. On a consecutive quarter basis, ABPU was up 6% from $0.049 in the first quarter of 2013.
• Monthly Unique Payers (MUPs) decreased from 4.1 million in the second quarter of 2012 to 1.9 million in the second quarter of 2013, down 53% year-over-year. On a consecutive quarter basis, MUPs were down 22%.

Maybe Zynga is learning that the company made tons more revenue 3-4 years ago, or so, as compared to today. Zynga believes their biggest focus should be on the free to play social games (Exactly what Mafia Spirit has been saying for a while now.)

Zynga believes its biggest opportunity is to focus on free to play social games. While the Company continues to evaluate its real money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the United States. Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offerings.

Q3 2013 doesn’t appear, at this time, to improve upon the Q2 Financial Statements of Zynga’s. Net losses are projected to be between $14 million and $43 million for Q3.

Outlook

Zynga's outlook for the third quarter of 2013 is as follows:

• Revenue is projected to be in the range of $175 million to $200 million.
• Net loss is projected to be in the range of ($43) million to ($14) million.
• EPS is projected to be in the range of ($0.05) to ($0.02), based on a share count of approximately 803 million to 813 million shares.

• Bookings are projected to be in the range of $125 million to $150 million.
• Adjusted EBITDA is projected to be in the range of ($30) million to breakeven.
• Non-GAAP EPS is projected to be in the range of ($0.09) to ($0.05), based on a share count of approximately 803 million to 813 million shares.

It will take Don Mattrick, the Savior, at least through the next Quarter to prove that he is what Zynga is paying him for. I remain skeptical because a company is much larger than a single man. If Mr. Mattrick can’t make believers of the employees then the shareholders and users of Zynga’s services won’t retain any faith either.