Zynga revenue drops 18 percent as player base shrinks

The social game maker brings in nearly $264,000 in revenue with bookings of $230 million. But the number of people playing Zynga's games continues to decrease.

Zynga CEO Mark Pincus at "Zynga Unleashed" on June 26, 2012 Rafe Needleman/CNET

Zynga posted a small profit in the first quarter of 2013, earning 1 cent per share and bringing in $263,589 in revenue, the company reported Wednesday.

That beats expectations, but is down 18 percent from the same period last year. Bookings brought in $230 million, which is down 30 percent from the previous year.

Some Wall Street analysts expected the company to report a loss of 4 cents per share with a revenue of $209.79 million, according to Nasdaq. The company's own expectations was a loss of 5 to 4 cents a share with revenue between $255 million and $265 million.

Zynga's stock was up about 5 percent at the end of trading on Wednesday, hitting $3.35 per share, but tumbled after hours.

CEO Mark Pincus said during the company's earnings call that it counts the Farmville 2 franchise as a success. Most games individually contributed less than 10 percent to Zynga's revenue, but Farmville 2 brought in 22 percent. Zynga Poker came in second, making up 16 percent of Zynga's revenue.

Pincus said Farmville 2 has taught the company that it has to cater to all levels of players, both frequent players and more causal gamers, by pushing out multiple new features each week.

"There are lots of lessons we can use to creating these franchises and winning in the long term on mobile," he said.

The number of people playing Zynga's games continued to decrease, according to the company. Daily active users were down 21 percent, from 65 million in the beginning of 2012 to 52 million this year. Monthly active users were down 13 percent, going down to 253 million users during this quarter.

Zynga executives said the loss of players was a result of some games shutting down and the company ramping down the release of new games. COO David Ko said the company, which has had a lot of turnover among executives, has been trying to figure out how to best pair leaders and projects. Zynga plans to increase its launches this year, which executives believe, will increase its player base.

The company also touted its further separation from Facebook. Zynga began registering players independently from Facebook in March, which allows it to take all revenue from purchases made within games. Games on Facebook accounted for 76 percent of Zynga's total revenue in the first quarter, down from more than 80 percent over the same period last year.

Pincus said Zynga.com registered 3.5 million monthly users in the first few weeks of launch. "The player base on Zynga.com represents some of our more dedicated, more hardcore players that have come and already established ongoing play patterns with us," he said.

Although there were several questions about Zynga's interest in real-money gambling, this quarter's report doesn't includes the results of Zynga's foray into this industry , which could potentially be a lucrative market for the company. The company launched this franchise in April, after the end of the first quarter.

Zynga Q1'13 Earnings Slides

Update, 3:01 p.m. PT: Updated with comments from Zynga's earnings call.

 

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