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Zynga is on a roll as it hit its financial targets for the past three quarters, including the fourth ended December 31. The company reported that Words With Friends 2 and a reinvigorated Zynga Poker produced solid holiday results.
Words With Friends 2 helped push the franchise to its best mobile revenue and bookings in its eight-year history. CSR 2 mobile revenue was up 90 percent from a year ago, and Zynga Poker’s mobile revenue was up 44 percent from a year ago.
The revenue for the fourth quarter was $233.3 million, up 22 percent from the same quarter a year ago. That was the best quarterly performance in five years. Earnings per share were 1 cent, the same as analysts expected. The results show that Zynga continues to perform well under the leadership of Frank Gibeau, a former Electronic Arts executive.
Zynga is still dealing with the decline of its web and Facebook desktop business, even as its mobile game audience continues to grow. About 87 percent of the audience is now on mobile platforms. Mobile revenue was up 32 percent from a year earlier, and mobile bookings were up 18 percent from a year ago. Average monthly active users in Q4 were 86 million, up 37 percent from 63 million a year earlier.
“It was a great holiday quarter, and we ended 2017 strong,” Gibeau said in an interview with GamesBeat.
Existing games such as Zynga Poker — now it in its 10th year — have seen strong growth, and Zynga continues to extract revenues through live operations, such as tournaments or special events. The CSR 2 mobile racing game had a Fast & Furious event, as well as an augmented reality car selfie feature, that helped drive growth for the game. Zynga Poker in particular has been growing because of the company’s emphasis on live operations, where a team of developers stays actively involved in adding new events to keep the players coming back on a daily basis.
In the second half of 2018, Zynga Poker will hold a partnership with World Poker Tour, an international brand in real-world poker tournaments. Zynga Poker will bring World Poker Tour inside the game in live tournaments.
Overall, the mobile audience was 20 million daily active users, up 24 percent from a year ago. That was the highest level in four years.
Zynga is planning on launching more title in the second half of 2018. Zynga has about 1,500 employees. Gibeau said the company is building out its studio system, making sure each one of its major franchises has good talent. It is also taking more time in working on games before they go into a soft launch, or limited geography market test.
Last quarter, Zynga acquired the casual game operations of Peak Games, based in Turkey, for $100 million. For the first quarter, Zynga expects ad revenue will grow, and profit margins will be similar to the first quarter a year earlier. Revenue is expected to be about $200 million, and a net loss will be about $5 million.
Gibeau said the company will continue to launch new games and improvements in its older titles, grow through acquisitions, and invest in emerging technologies such as chat games, augmented reality, virtual reality, and 5G wireless networks. Those latter technologies will be new ways to engage with users, but Zynga does not expect significant monetization from them in 2018.
“I’m bullish about mobile in general, when you look at all of the technologies that are coming to the mobile platform,” Gibeau said. “It will be a dynamic platform for a long time to come. Mobile chat has been where we have invested the most time and talent. It’s pre-monetization. But Words With Friends has reached a big audience on chat. It’s younger, and more male, and so we see it as incremental growth.”
As for acquisitions, Gibeau noted that Zynga generated $95 million in cash flow in 2017, and it could use some of that money for acquisitions, just as it did with the Peak Games deal and its $42 million purchase of Harpan Solitaire in early 2017.
Zynga is still investing in its mobile hardcore game, Dawn of Titans, and Gibeau said he believes the company can grow the game this year with new content and other live operations.
As for social casino slot games, Gibeau said the company is focusing on four core games: Hit It Rich!, Black Diamond, Willy Wonka, and the Wizard of Oz. It will invest in doing fewer games and doing them better, he said.
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