Zynga sets quarterly revenue record despite social slots decline
Social gaming operator Zynga turned a profit in 2017, the first time it has accomplished that feat since 2010.
Late last week, Zynga reported revenue of $233.3m in the three months ending December 31, 2017, a 22% year-on-year improvement and a new quarterly record. Zynga also posted a $12.9m profit versus a $35.4m loss in Q4 2016, extending its profit streak to three consecutive quarters.
For the year as a whole, revenue was up 16% to $861.4m, while net income came in at $26.6m, a year-on-year improvement of nearly $135m. It’s the first time since Zynga went public in 2010 that the company has ended a year in the black.
The gains are due to a combination of factors, including the company’s successful transition to a mobile-first company, an area that was once the company’s Achilles heel. Mobile revenue was up 29% in 2017, with mobile’s share of overall revenue rising nine points to 86%. Cost controls also played a role, as Zynga managed to cut operating expenses from 83% of revenue in 2016 to just 67% last year.
Acquisitions, including Harpan Solitaire and Peak Games, provided another boost. The latter deal didn’t close until mid-December, but did allow Zynga to start 2018 with the world’s largest portfolio of card games.
The venerable Zynga Poker celebrated its 10th birthday in 2017, yet it finished Q4 with mobile revenue and bookings up 44% and 38%, respectively, hitting all-time highs in both categories. Zynga Poker accounted for 22% of Zynga’s 2017 game revenue and 23% of bookings.
Zynga hopes to further its poker product’s exposure after announcing a multi-year partnership with the World Poker Tour. The deal will see Zynga Poker incorporate “WPT-themed in-game bold beat tournaments” to deliver “a more competitive, authentic tournament experience.” Users can expect to see these changes sometime in H2 2018.
Zynga’s social slots portfolio fared less well in Q4, with mobile revenue and bookings down 12% and 8%, respectively. Zynga claimed the downturn was the result of a “quality over quantity” strategy that “refocused our slots portfolio on our core games” to boost monetization. Nonetheless, the slots category contributed 27% of FY17’s game revenue and 26% of bookings.
Looking ahead, Zynga says it has unspecified social casino games in the development pipeline that will likely appear into the second half of 2018. The ultimate goal is to create new “forever franchises” that can take some of the load off the established titles.
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