Friday, January 31, 2014

Early Financial Conference Call For Zynga’s Q4’14

For some unknown reason Zynga decided to discuss the company’s Fourth Quarter and Full Year 2013 Financial Results yesterday as opposed to the February 6, 2014 date it originally announced [1].

Surprise Move On Zynga FinancialZNGA Revenue January 30 2014

For the 6th consecutive quarter Zynga has shown a decline in revenues. Zynga’s Q4’13 revenues are only 53% the amount Zynga generated in Q2’12.

ZNGA Revenue January 30 2014 2
Revenue Quarter Over Quarter

Q2’12 $ 332  
Q3’12 $ 317 - $ 25
Q4’12 $ 311 - $  6
Q1’13 $ 264 - $ 47
Q2’13 $ 231 - $ 33
Q3’13 $ 203 - $ 28
Q4’13 $ 176 - $ 27
    - $ 166

$ In Millions

Q1’14 Projected Revenue

Q1’14 $ 155 – $165 - $ 11 to – $ 22

In Q1’14 Zynga projects another decline in revenue. Zynga is projecting revenue in Q1’14 to be between $11 – $22 less than the $176 million the company generated in Q4’13. FarmVille, FarmVille 2, and Zynga Poker continue to carry the company in revenue as those 3 games have generated more than half of Zynga’s total revenue.

Mafia Wars players and fans might want to start thanking FarmVille players for keeping the game we love and play free to play.

The decline in revenue is being over-shadowed by optimism that Zynga will have a positive year in 2014. During the conference call Zynga announced the acquisition of NaturalMotion. NaturalMotion is known for hit mobile games "CSR Racing" and "Clumsy Ninja". Don Mattrick further boosts the ‘high hopes’ of ZNGA investors by proclaiming that “Zynga will have no debt and $1.2 cash on the company’s balance sheet.” 

Pre-Market 1 31 2014

WSJ: Do you see more acquisitions ahead?

Mattrick: After we purchase NaturalMotion, we’re going to have no debt and $1.2 billion on our balance sheet. We’ve got a really solid business and solid position.

The Wall Street Journal showed more optimism of Don Mattrick within an edited interview;

WSJ: What’s been going on since you were named CEO?

Don Mattrick: It feels to me like we’ve ended 2013 with material progress, with momentum that we’re carrying into 2014 and we’ve had some successes. Two examples of successes we call out in our earnings call later today, which is growth in our casino business, which is posting growth for the first time in 18 months, and the second highlight is “Words With Friends” doing its largest quarter in the history of that product, which is a five year product to date.

WSJ: How would you characterize the company’s strategy at this point?

Mattrick: Content is a core area where we just see great opportunities to build a business that is able to post multiple top 20 global hits. And when I look at our current portfolio, we would say we have been blessed to have three of those already in our poker/casino products, our “Words With Friends” products, and with “FarmVille.”

We’ve got new bets underway that we will be announcing that we’ll announce over the course of 2014, but you can anticipate that we’re still funding, still creating new products in addition to those products.

I’m a bit more skeptical. Unless Zynga can draw players back to it’s existing titles and/or have a few major hits this year I am not going to jump on the Band-Wagon just yet.

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