Facebook Continues To Propel Zynga In 1Q

Zynga said its games held eight of the top 10 spots on Facebook in terms of daily average users as of March 31, and the developer also touted the beta launch of its Zynga.com platform while reporting its financial results for the first quarter of 2012.

Bookings and revenues rose compared with the first quarter of 2011, on the strength of rising audience totals. However, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) fell, and the company posted a net loss, due to expenses related to developing new games.

Highlights from Zynga’s first-quarter earnings release include:

  • Daily active users: Up 6 percent to 65 million in the first quarter of 2012 from 62 million in the year-ago period.
  • Monthly active users: 292 million in the first quarter, a 24 percent jump from 236 million in the first quarter of 2011.
  • Monthly unique users: Jumped 25 percent from 146 million in the prior-year period to 182 million in the first quarter of 2012.
  • Six new games: During the first quarter of 2012, Zynga launched Hidden Chronicles (pictured below), Zynga Slingo, Scramble with Friends, Dream PetHouse, Dream Heights, and Draw Something. Zynga acquired Draw Something developer Omgpop in March for $180 million.
  • Bookings: The company posted record bookings of $329.2 million, up 15 percent versus the previous-year quarter and up 7 percent compared with the fourth quarter of 2011.
  • Revenue: Revenue of $321 million was up 32 percent compared with the first quarter of 2011 and up 3 percent versus the fourth quarter of 2011. Online game revenue was $292.8 million (up 27 percent and 3 percent, respectively), while advertising revenue was $28.2 million (up 117 percent and 3 percent, respectively).
  • Adjusted EBITDA: $86.8 million, down 23 percent versus the year-earlier period due to increased investment in developing new games, but up 28 percent compared with the fourth quarter of 2011.
  • Net income: Zynga posted an $85.4 million net loss, versus $16.8 million of net income in the prior-year quarter. The first quarter of 2012 featured $133.9 million of stock-based expense, compared with $14.5 million in the first quarter of 2011.
  • Non-GAAP (generally accepted accounting principles) net income: $47 million, down 38 percent from the year-earlier period, but up 27 percent versus the fourth quarter of 2011.
  • Earnings per share: The company posted a loss of $0.12 per share, versus break-even in the first quarter of 2011.
  • Non-GAAP EPS: $0.06, versus $0.11 in the year-ago quarter and $0.05 in the fourth quarter of 2011.

Zynga’s updated outlook for 2012 is as follows:

Bookings: $1.425 billion to $1.5 billion.

Adjusted EBITDA: $400 million to $450 million.

Stock-based expense: $420 million to $445 million, excluding the impact of equity awards that may be granted in connection with potential future acquisitions.

Capital expenditures: $390 million to $410 million, including the purchase of its headquarters earlier this month.

Non-GAAP EPS: $0.23 to $0.29.

Founder and Chief Executive Officer Mark Pincus said:

We’re pleased with the progress that Zynga has made in the first quarter, growing our audience reach 25 percent year over year and nearly 20 percent quarter over quarter. Our team did a great job launching new games across mobile and Web, including new hits like Hidden Chronicles, Slingo, and Scramble with Friends.

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