Zynga Says Mobile Revenue Rose in Q2 2018, 'Merge Dragons' Provides Boost

Game developer Zynga on Wednesday forecast third-quarter bookings ahead of Wall Street estimates, driven by revenue from Merge Dragons and other newly acquired smartphone games.

Zynga, once best known for Farmville, has been beefing up its slate of smartphone games ever since users ditched Facebook-based desktop games around 2012 and began turning increasingly to mobile devices.

Under Frank Gibeau, who became CEO in 2016, San Francisco-based Zynga has tried to revamp itself as a mobile-focused games maker, and has snapped up several smaller game studios including Gram Games and the card and board games studio of Peak Games.

Newer games such as Gram's Merge Dragons - an easy-to-play and addictive title Zynga acquired in May - boosted the company's bookings forecast. The company expects current-quarter bookings of $248 million (roughly Rs. 1,700 crores), above financial analysts' average estimate of $245.4 million, according to Thomson Reuters I/B/E/S.

Bookings are an important measure of future revenue for companies like Zynga which sell virtual goods such as currency and lives inside smartphone gaming apps.

Legacy Zynga games such as Words with Friends 2 and CSR Racing 2 helped the company report second-quarter bookings of $233.9 million, above Wall Street estimates of $227 million.

Zynga said mobile revenue, which accounted for 89 percent of total revenue, rose 7 percent to $192.7 million in the second quarter ended June 30.

However, the average number of Zynga's daily active users (DAUs) - 23 million - fell below analysts' expectations of 26.7 million.

Zynga has been phasing out older games which despite being popular have been unprofitable, Gibeau said in an interview.

"The second issue (impacting DAUs) was more short-term in nature as Facebook made changes to its platform," Gibeau said. "They introduced some friction in the user experience for some of our games ... things like new prompts, re-logins."

Zynga reported a net loss of $911,000 or break-even per share in the second quarter, compared to a profit of $5.1 million or 1 cent per share a year earlier.

Analysts had expected second-quarter earnings of 3 cents per share.

© Thomson Reuters 2018