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   Technology StocksZynga, Inc.

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From: Glenn Petersen5/6/2020 7:23:32 PM
   of 358
Zynga grows Q1 revenue 52% to $404 million but payouts hurt bottom line

Dean Takahashi @deantak
May 6, 2020 1:05 PM

Zynga reported record revenue and bookings in the first quarter ended March 31 as more people turned to social mobile games while isolated because of the pandemic. But payouts to acquired companies that are producing these hit games have hurt the bottom line.

While the increase in mobile gameplay due to the pandemic was good for the company in the last two weeks of the quarter, Zynga didn’t have any particular big hits that launched during the quarter.

But in terms of costs, the payouts to Small Giant Games and Gram Games led to a larger than expected loss. The problem is that, because of accounting rules, Zynga can’t recognize the revenue for the acquired companies as quickly as it is required to recognize the expenses.

Revenue was $404 million in Q1, up 52% from a year ago, while bookings were $425 million, up 18%, thanks to good results from Empires & Puzzles, Merge Magic, and Merge Dragons — games that San Francisco-based Zynga acquired in acquisitions. The company reported a GAAP net loss of 11 cents a share, or $103.9 million, compared to a loss of 14 cents a share, or $128.8 million in the first quarter of 2019.

On a GAAP basis, analysts had expected a loss per share of 2 cents on bookings of $407 million. As usual, it’s a bit hard to parse due to the way Zynga has to report its revenues and earnings due to regulatory requirements. Zynga itself had expected $400 million in bookings and a loss of 3 cents.

But CEO Frank Gibeau said in an interview with GamesBeat that the company has to defer a considerable amount of the revenue to future quarters, based on accounting rules for deferred revenue. When a player buys a pack of virtual items they may use in a game, Zynga typically spreads the recognition of that revenue out over 10 months, rather than recording the revenue in the current quarter. Zynga has a balance of about $453 million in deferred revenue, which will help the company’s performance in future quarters.

“It’s a strange time for the world. Games have really stepped to the forefront in being a great way to keep people connected and socializing and playing,” Gibeau said. “This is probably the most meaningful time in terms of what our products do for society. The feedback coming back from our fans has been really positive.”

In after-hours trading, Zynga’s stock is falling 5.7% to $7.53 a share.

One of the things that affects Zynga’s earnings is strong performance from the acquired companies Small Giant Games (maker of Empires & Puzzles) and Gram Games (maker of Merge Dragons), both acquired in 2018. The only trouble is that contingent consideration expenses (performance bonuses) related to those deals raises Zynga’s expenses as it has to pay bonuses to those divisions. It would probably be better for the financial picture if homegrown games like Words With Friends performed better, but that’s not what it is happening at the moment, with the exception of good performance from Game of Thrones: Slots Casino.

“These types of payments are going to be coming through the P&L, and it’s part of the deal structure we put in place,” Gibeau said. “It’s a good news, bad news thing. The good news is the products are absolutely crushing it and are well ahead of the deal models we used to acquire the companies. Contingent consideration [bonuses] goes up. Deferred revenue goes up. And it pushes out a lot of the revenue but you have to record the costs now.”

In addition to the acquired games, Zynga has a half-dozen strong titles that keep performing well every quarter — its “Forever Franchises” such as Zynga Poker and CSR2. Zynga is keeping those games strong through live operations, such as special events or new in-game items.

Some games are weakening, like older mobile titles and chat games. But Zynga has plans for some big launches, with upcoming games FarmVille 3, Harry Potter match-3, and Puzzle Combat. And Gibeau said the company felt good about the launch of Play Apart Together, a campaign that promotes the physical distancing during the pandemic as advocated by the World Health Organization (WHO). More than 55 companies banded together during recent weeks to promote the campaign.

The stock market reaction to Zynga’s results are usually driven by whether it hits revenue or earnings targets. But it’s complicated because Zynga is required to report some revenue later than when it actually receives it (like when a user buys in-game currency but doesn’t use it until much later). This is called deferred revenue. But if you add the changes in deferred revenue and revenue, you get a better picture of the actual quarter’s results in a number dubbed bookings. Zynga’s management uses this number in how it guides expectations.

Financial Results

Zynga’s actual earnings results for the first quarter fell short of expectations, with a loss per share of 11 cents, or $103.9 million, compared to a loss of 14 cents a share, or $128.8 million, a year earlier. Zynga had guided analysts to a net loss of $26 million, adjusted EBITDA of $57 million, and a net loss of $57 million. Adjusted EBITDA came in at $68 million, about $11 million above guidance.

One of the things that was weaker in the quarter was advertising revenue and bookings, which were $59 million, down 9% from a year ago, as the company saw some pullback in advertising in mid-March. Still, this negative was offset by stronger player engagement during the quarter. Gibeau said advertisers for Zynga’s games did not cut back as much as larger brands did on spending elsewhere.

“In general, our ad business is hanging in there,” Gibeau said. “It’s down a little bit, but it is hanging in there.”

Zynga saw a lower net increasing deferred revenue, which helped improve GAAP gross profit margins, which hit 64% in Q1 compared to 54% a year ago. GAAP operating expenses were also lower in the quarter, though Zynga saw some costs rise from marketing and bonuses paid to acquired companies. Zynga had expected to pay a bonus of $25 million in the quarter, but the acquired companies did so well that the bonus was actually $120 million, much higher and resulting in the net loss.

As a public company, Zynga is required to report quarterly results on a U.S. GAAP basis, while analysts and investors use non-GAAP financial metrics to assess a company’s underlying performance. Bookings and adjusted earnings before income tax, depreciation, and amortization (EBITDA), excluding the impact of deferred revenue, are among those metrics that are most highly scrutinized as they reflect the actual operating activity of the company better.

How well Zynga performs on EBITDA versus analyst expectations is another thing that determines whether the stock rises or falls after earnings.

Zynga’s stock price is also affected by how the company predicts it will do in the second quarter and the outlook for the full year. Zynga has raised its full-year guidance to $1.65 billion in revenues, up 25% from 2019, or rosier than previously expected. Overall, Zynga’s cash position is strong at $1.43 billion.

User numbers

In Q1, the average mobile daily active users (DAUs) were 21 million, and mobile monthly active users were 68 million, down 7% and 5% respectively from a year earlier, respectively. Merge Magic grew its audience, but older mobile titles, Words With Friends, and chat games saw decreases in mobile DAUs, while chat games and older mobile titles saw decreases in mobile MAUs. Bookings per average mobile DAU was up 27% from a year earlier. Sequentially, Q1 mobile DAUs and mobile MAUs increased modestly, led by growth in casual cards and Words With Friends.

Since late March, as more people sheltered-in-place, Zynga has seen higher levels of engagement in games and it expects this to positively affect Q2 mobile DAUs and MAUs. On a sequential basis, Gibeau said he expects the number of users to go up in the second quarter.

Game performance

CSR2 added a new feature dubbed Elite Customs during the quarter, which lets players customize and upgrade their car collections. And Zynga is working with Universal Brand Development and Digital Platforms to bring Fast & Furious cars to the racing game.

Empires & Puzzles delivered its best revenue and bookings quarter, thanks to the launch of a new battle pass system that rewards players for completing tasks. It also introduced Season 3 with a new land with Norse gods. Merge Dragons and Merge Magic saw a lot of live events updates. The social slots games hit a record quarter in revenues and bookings with strong performance for themed events.

Words With Friends had a strong quarter in installs and reactivations in March, as players dealt with the pandemic. Late in the second quarter, Zynga will introduce Duels, a new social competitive game mode that rewards players for bringing new and lapsed players back into the fold. And Zynga Poker had a boost from a variety of themed events in the quarter as well as a new quick chat feature.

Growth plans

Zynga said it continues to believe in the long-term potential of games despite the uncertainty around the duration of the pandemic. The company plans to grow through live services growth, creating new forever franchises (those that can generate more than $100 million a year for five years), investing in new platforms, and acquisitions.

Zynga’s top franchises include a diverse mix: CSR Racing, Empires & Puzzles, Merge Dragons, Words With Friends, and Zynga Poker. The newer Merge Magic is promising, and the company still operates social slots and casual card games. Since late March, the company has seen strong reactivations from lapsed players as they cope with self-isolation.

“It was a strong quarter for us all the way through,” Gibeau said. “In the last two weeks, we started to see an uptick. It was already a strong quarter for us. A lot of the impact you will see from shelter-in-home and increases in engagement will impact our Q2 numbers.”

Zynga’s teams are working from home, and the company sees no major work disruptions happening. In March, Zynga began testing its Harry Potter: Puzzles and Spells match-3 title, and it is also testing Puzzle Combat and FarmVille 3. Those games are expected to debut in the second half of the year.

Gibeau also said that Zynga’s move to self-publish Empires & Puzzles in Asia is getting positive results. That is generating good international results for Zynga.

“I’m pleased to see us get into a much more balanced configuration there,” Gibeau said.

And Zynga is experimenting with titles like Tiny Royale on Snapchat’s Snap Games platform, as well as Words With Friends and Draw Something on Facebook Instant Games.

Q2 guidance

For the second quarter ending June 30, Zynga expects revenue of $400 million, up 31% from the same quarter a year ago, while bookings are expected to be $460 million, up 22%. Live services will drive the performance, as existing titles will continue to generate good revenue. The revenue and bookings numbers are well ahead of forecasts, Gibeau said.

“As we moved into, and May has just started, we see the positive impact of increased engagement,” Gibeau said.

The year-ago comparisons will be favorable with the additions of titles such as Merge Magic and Game of Thrones: Slots Casino.

“Those games are on a really good run,” Gibeau said. “In Q2, one of the standouts is Words With Friends.”

This momentum will be offset a bit by declines in older mobile and web titles. User pay will be a bigger driver of growth while advertising will be weaker because of pressure from the pandemic, which is prompting brands to pull back from advertising.

Zynga doesn’t expect to launch new games in the second quarter. It anticipates a loss of $60 million in the second quarter and adjusted EBITDA of $32 million. Excluding the impact of deferred revenue, the EBITDA would be $92 million.

Expectations for the year

For the full year, Zynga raises its full-year 2020 revenues and bookings guidance by $50 million. Revenues are now expected to be $1.65 billion in revenue, up 25% from 2019, and bookings of $1.8 billion, up 15%.

The guidance assumes that live services will drive the vast majority of the overall performance as existing big titles are expected to do well throughout 2020. New games are expected to debut in the second half of the year. While advertising could decline modestly, growth in user spending is expected to more than offset that.

Overall, Zynga expects a net loss of $245 million for the year and adjusted EBITDA of $210 million (up $123 million from 2019 due to stronger operating performance and a lower increase in deferred revenue). About $200 million of that loss will be “contingent consideration expense,” or bonuses that Zynga may have to pay to its acquired companies if they hit their targets. Zynga now owns 86.7% of Small Giant Games, and it will acquired the reminder in the first quarter of the next two years.

The company will spend more money on marketing as it launches new games. While performance is expected to be strong in the first half, it’s not clear how the COVID-19 crisis will change business in the latter part of the year.

Zynga has 1,908 employees, up from 1,883 employees in the previous quarter. The studios in Europe, the Middle East, and Asia grew, with a little decline in Canada and the U.S.

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From: gypsees5/12/2020 10:59:53 PM
   of 358
Looking like it wants to take a rest! Might get a put tomorrow if it doesn't gap down big. Then grab a call for the ride back up :)

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To: gypsees who wrote (351)6/1/2020 8:30:34 AM
From: Glenn Petersen
   of 358
Zynga acquires mobile gaming company Peak for $1.8 billion

Chris O'Brien @obrien
June 1, 2020 5:19 AM

Zynga will purchase Istanbul-based game developer Peak for $1.8 billion marking the largest acquisition in the company’s history.

In a press release, Zynga officials said the deal would be financed by $900 million in cash and $900 million in stock. Zynga had previously bought Peak’s casual card game studio in 2017 for $100 million.

The deal is the latest sign of Zynga’s resurgence. After several shaky years following its 2011 IPO, the company has reversed its fortunes thanks to a combination of inhouse game development and strategic acquisitions.

Peak is best known for mobile games such as Toon Blast and Toy Blast. The press release noted that Peak’s titles have ranked in the top 10 and top 20 highest grossing games for the iPhone for the past two years. With 12 million daily active users, executives project that the deal will increase Zynga’s DAUs more than 60% while also helping the company expand its international reach.

In a message posted on Peak’s website, founder Sidar Sahin said he was immensely proud of his company’s 100 employees and what they have accomplished since the company’s founding.

“Ten years ago we set out on an amazing journey to make our dreams come true,” he wrote. “Touching millions of peoples’ lives with our technology was just one of those dreams. Today we are one of the largest companies in the global mobile gaming industry. Our games are played daily by millions of people in 193 countries.”

Investors seemed to applaud the deal, sending Zynga’s stock up $.65 per share or 7.10% to $9.80 in pre-market trading. That’s also up from $2.86 per share five years ago.

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From: Glenn Petersen8/9/2020 10:39:25 AM
   of 358
How ‘hyper-casual’ games are winning the mobile market

Games makers are scoring hundreds of millions of downloads by churning out cheaply made titles

Tim Bradshaw, Global Technology Correspondent
Financial Times
AUGUST 6 2020

Hyper-casual games are made and released quickly and cheaply, often by teams of just two or three people © FT Montage

The company responsible for more mobile-game downloads last year than any other publisher around the world has no identifiable mascot like Super Mario or Lara Croft. None of its titles has the brand recognition of Candy Crush Saga, Call of Duty or Fortnite. Even the format it pioneered — so-called “hyper casual” gaming — is obscure to most people outside the mobile industry.

Yet according to market researchers App Annie, French start-up Voodoo outpaced far larger rivals including Tencent, Activision Blizzard and Nintendo by app install volumes in 2019. Voodoo says more than 1bn players to date have downloaded more than 3.7bn of its games, which include Helix Jump, Crowd City and

Hyper-casual’s position as one of the games industry’s hottest new trends was confirmed this week by Zynga’s $168m acquisition of Istanbul-based Rollic Games. Zynga chief executive Frank Gibeau called hyper-casual “the fastest-growing category on mobile” — making it the biggest new thing in the most lucrative part of the games business.

The hyper-casual concept is a reaction against the standard formula for creating games. Instead of an expensive and lengthy process of testing, polishing and refining a title, in the hopes that gamers will spend years playing, hyper-casual publishers work by volume, often pushing out a new title every week in the hope that something takes off.

Each app is built cheaply, often by teams of just two or three people, using crude graphics and super-simple gameplay. If a game starts to show promise, the publisher buys up audiences through cheap online ads, then churns them into revenues by showing yet more ads inside the game itself.

Helix Jump produced by French start-up Voodoo Aqua Park also by Voodoo “

They have done to Candy Crush what Candy Crush did to traditional PC games,” said Stephane Kurgan, former chief operating officer at Candy Crush makers King, and now an investor at Index Ventures. Whereas hundreds of people might work on traditional PC and console games such as Call of Duty or Grand Theft Auto, Candy Crush was initially created in six months by just a handful of people.

“The barrier to entry is very low and it’s highly capital-efficient” to push out dozens of hyper-casual games and “see what sticks”, Mr Kurgan said. Hyper-casual publishers such as Voodoo, Rollic and Ubisoft-owned Ketchapp draw on thousands of small development studios all over the world which are constantly pumping out new ideas.

“The cost of building games is dropping and therefore people can put out games really quickly and cheaply,” said Paul Murphy, a partner at venture firm Northzone and the founder of mobile game developer Dots. But he added: “Because you can get something out there for little to no effort, in hyper-casual there is a lot of crap, and a lot of clones, and a lot of clones of crap.”

Another games company founder lamented that the industry’s creativity had been reduced to an “Excel exercise” by the trend.

In Helix Jump, one of Voodoo’s most popular games, players must swipe left and right to spin a wheel, allowing a bouncing ball to fall as far as possible. Each attempt is interspersed with a full-screen ad, often for other games, while two more ads are layered on top of the gameplay. This density of ads, combined with hundreds of millions of downloads a month across the category, is what makes hyper-casual gaming so lucrative.

A typical user’s average play session on a hyper-casual game lasts just two and a half minutes a day, according to a joint report on the market by Adjust and Unity, two providers of tools for app makers, compared to nearly 20 minutes per session per user per day for other kinds of games. That means the average income from each user is also small, at a median of just $0.13, Adjust and Unity found.

However, hyper-casual publishers do not spend extra money targeting particular audiences — after all, who knows to whom games Flappy Dunk, Voodoo’s odd mash-up of Flappy Bird and basketball, might appeal?

“You have to be super appealing to the widest audience possible,” said Andrei Dubinin, who runs the new hyper-casual division of Russian publisher My.Games. “You have to appeal to billions, not millions.”

That means the companies’ distribution costs are also far lower than traditional games, often running automated ads on social media that simply show the app’s gameplay.

“It’s very clever to be able to have that arbitrage,” said Mr Kurgan, “but it only works as long as some platforms are inefficient. At some point the arbitrage shouldn’t fully be there.”

Tangle Master 3D by Rollic Games Baseball Heroes also made by Rollic

That leaves Voodoo, Rollic and their rivals racing to build a network large enough to be self-sustaining, using ads in their own games to drive downloads of new titles. The more games in the network, the more data publishers can gather on what players want, to inform the next wave of apps.

Still, some in the games industry are sceptical that any hyper-casual publisher can build a sustainable business longer term.

“It’s not a business in itself,” said the head of one leading mobile games developer, despite being a significant advertiser within hyper-casual games for his own titles. “New companies pop up all the time, it changes very fast.”

Alexis Bonte, group chief operating officer at Stillfront, a Stockholm-based games publisher, believes there is a “bit of a bubble” in the market. “There are a lot of hyper-casual studios openly on sale right now, trying to cash in,” he said, “which is always a sign.”

Nonetheless, Voodoo is hoping to become the hyper-casual industry’s first unicorn, according to people familiar with the matter. After raising $200m from Goldman Sachs two years ago, the company has been talking with prospective investors about selling another stake at a valuation of about $1.5bn and hopes to close the deal in the coming weeks.

Voodoo declined to comment on the negotiations, which had been previously reported by Bloomberg.

But even if hyper-casual does prove to be a fad, Mr Bonte said there are lessons for the rest of the industry in moving faster and using data to test new titles, accelerating an end to the practice of spending years developing a single game.

\I look at hyper-casual for inspiration,” he said. “I think there is something there.”

Additional reporting by Patrick McGeE

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From: Glenn Petersen11/4/2020 5:39:16 PM
   of 358
Zynga shares dip on loss despite record revenue

Published: Nov. 4, 2020 at 4:10 p.m. ET
By Jon Swartz

Zynga recorded its best average mobile daily-active users (31 million) and monthly-active users (83 million) in six years

Zynga Inc. shares were down 5% in after-hours trading Wednesday after the online-gaming company reported record third-quarter revenue that further illustrated its popularity during the pandemic but a growing loss.

The company reported a loss of $122 million, or 11 cents a share, compared with net income of $230 million, or 24 cents a share, in the year-ago quarter. (Last year, Zynga benefited from the sale of its building in San Francisco.)

Revenue soared 46% to a record $503 million from $345 million a year ago. Bookings, a key indicator of Zynga’s business, jumped 59% to $628 million.

The company also offered fourth-quarter revenue guidance of $570 million, and raised guidance for the full fiscal year.

“People found interactive entertainment pretty compelling, especially in mobile use,” Zynga Chief Executive Frank Gibeau told MarketWatch in a briefing before the results were announced. “There has been a huge amount of discovery, particularly in mobile.”

Underscoring its popularity, Zyng ZNGA, +3.78% a recorded its best average mobile daily-active users (31 million) and monthly-active users (83 million) in six years. Gibeau cited widespread playing of games such as “Words With Friends” and “CSR2.”

Zynga results were generally in line with Wall Street estimates. Analysts surveyed by FactSet had expected a loss of 13 cents a share on revenue of $627 million.

Zynga shares are up 61% this year as it continues to benefit from millions of Americans staying at home because of the coronavirus pandemic. The broader S&P 500 index SPX, +2.20% has improved nearly 7% in 2020.

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From: Glenn Petersen1/1/2021 9:48:39 AM
   of 358
FarmVille Once Took Over Facebook. Now Everything Is FarmVille.

December 31, 2020
December 31, 2020

In early 2009, when Facebook was still nascent in its efforts to swallow as much of the internet as possible, online games were not yet the behemoth they would become.

Then, that June, came FarmVille. If you weren’t among the tens of millions of people tending a cartoon patch of land on Facebook each day, piling up an endless stream of cutesy collectibles, you were still getting copious nags and nudges from your friends asking for help. The game either pulled Facebook users into an obsession or persistently reminded them that they were missing out on one.

The Flash-based game created by Zynga, designed to be played within Facebook, is shutting down on Thursday — yes, there were people still playing it — though its sequels that can be played through mobile apps will survive. But the original FarmVille lives on in the behaviors it instilled in everyday internet users and the growth-hacking techniques it perfected, now baked into virtually every site, service and app vying for your attention.

At its peak, the game had 32 million daily active users and nearly 85 million players over all. It helped transform Facebook from a place you went to check in on updates — mostly in text form — from friends and family into a time-eating destination itself.

“We thought of it as this new dimension in your social, not just a way to get games to people,” said Mark Pincus, who was chief executive of Zynga at the time and is now chairman of its board of directors. “I thought, People are just hanging out on these social networks like Facebook, and I want to give them something to do together.”

That was accomplished partly by drawing players into loops that were hard to pull themselves from. If you didn’t check in every day, your crops would wither and die; some players would set alarms so they wouldn’t forget. If you needed help, you could spend real money or send requests to your Facebook friends — a source of annoyance for nonplayers who were besieged with notifications and updates in their news feeds.

Ian Bogost, a game developer and professor at Wake Forest, said the behaviors FarmVille normalized had made it a pace car for the internet economy of the 2010s.

He did not mean that as praise.

The game encouraged people to draw in friends as resources to both themselves and the service they were using, Mr. Bogost said. It gamified attention and encouraged interaction loops in a way that is now being imitated by everything from Instagram to QAnon, he said.

“The internet itself is this bazaar of obsessive worlds where the goal is to bring you back to it in order to do the thing it offers, in order to get your attention and serve ads against it or otherwise derive value from that activity,” he said.

While other games had tried many of the same tactics — Mafia Wars was Zynga’s top hit at the time — FarmVille was the first to become a mainstream phenomenon. Mr. Pincus said that he frequently used to have dinner with Mark Zuckerberg, a co-founder of Facebook, and that in early 2009 he had been given advance notice that the platform would soon allow games to post to a user’s news feed. He said Mr. Zuckerberg told him that Zynga should flood the zone with new games and that Facebook would sort out the ones that resonated.

Though farming was far from a hot genre of games at the time, Mr. Pincus saw it as a relaxing activity that would appeal to a broad audience, especially among adults and women who had never spent hundreds of dollars on a console like the Xbox 360, PlayStation 3 or Nintendo Wii. It would be a preview of the soon-to-explode market for mobile games, with casual gamers shifting away from desktop as smartphones took hold.

The gaming industry was always chilly to FarmVille, despite its success. A Zynga executive was booed as he accepted an award at the Game Developers Conference in 2010, and Mr. Pincus said he had had trouble recruiting developers, who thought their peers wouldn’t respect them for working on the game.

In 2010, Time magazine named FarmVille one of “ The 50 Worst Inventions,” acknowledging how irresistible it was but calling it “barely a game.”

To many, the game will be remembered more for its presence in people’s news feeds than for the game itself. Facebook was well aware of the complaints.

After hearing from nonplayers that the game was spammy, Facebook restricted how much games’ could post to news feeds and send notifications. Facebook now aims to send fewer notifications only when they’re more likely to make an impact, said Vivek Sharma, a Facebook vice president and head of gaming.

He credited FarmVille for much of the rise of social gaming and said the “saga” over excessive notifications had taught Facebook some important lessons.

“I think people started to figure out some deeper behavioral things that needed to be tweaked in order for those applications to be self-sustaining and healthy,” he said. “And I think part of that is this idea that actually people do have a limit, and that limit changes over time.”

Even if people were annoyed by the notifications, there’s little doubt that they worked. Scott Koenigsberg, a director of product at Zynga, noted that the requests had been sent by players opting in to send them.

“Everybody saw a ‘lonely cow’ notification at some point or another, but those were all being shared by their friends who were playing the game,” he said.

Mia Consalvo, a professor in game studies and design at Concordia University in Canada, was among those who saw FarmVille constantly in front of her.

“When you log into Facebook, it’s like, ‘Oh, 12 of my friends need help,’” she said.

She questioned how social the game actually was, arguing that it didn’t create deep or sustained interactions.

“The game itself isn’t promoting a conversation between you and your friends, or encouraging you to spend time together within the game space,” she said. “It’s really just a mechanic of clicking a button.”

But those who went back every day said it had kept them in touch with friends and acquaintances, giving them something to talk about.

Maurie Sherman, 42, a radio producer in Toronto, said that he and a receptionist had played together and that he had gone to her desk daily to chat about it. “She would tell me about the pink cow she got,” he said.

He enjoyed it as an escape, a virtual stress ball and a soothing activity that would let his mind wander. He said he had spent more than $1,000 — that’s real money — over the years to improve his farm or to save time.

And he was absolutely guilty of sending the notifications, he said — but they always succeeded in getting him the help he wanted.

“There are people who would mute you or unfriend you just because they were tired of hearing that you needed help with your cows,” he said.

Jaime Tracy, 59, of Lancaster, Pa., said she had been “one of those annoying people” who made frequent requests for help until her friends and relatives had told her to knock it off.

But she loved the game, which she saw as a form of meditation, and played for more than five years. With her children grown and out of the house, “I had nothing else to do,” she said.

“You could just turn your mind off and plant some carrots,” she said.

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To: Glenn Petersen who wrote (355)8/6/2021 6:22:47 AM
From: Glenn Petersen
   of 358
ZNGA is down 14% in early morning trading.

Zynga Warns Pandemic Lift Is Ending for Videogame Companies

Easing of Covid-19 pandemic restrictions has started to bite game publishers

By Sarah E. Needleman
Wall Street Journal
Updated Aug. 5, 2021 6:19 pm ET

Zynga Inc., the mobile game company behind franchises such as FarmVille, said its audience declined more than it expected late in the second quarter, and the company lowered its full-year forecast for bookings, a key indicator of sales.

The disclosures helped send Zynga’s shares down about 16% in extended trading Thursday, though the company posted record revenue and bookings for the quarter that ended in June.

“What we started to see as we entered June was this great reopening,” Zynga Chief Executive Officer Frank Gibeau said in an interview. “People started traveling and going out to dinner again.”

Zynga isn’t the only game company that noted a recent slowdown in engagement coming out of the most recent quarter. Take-Two Interactive Software Inc. and Activision Blizzard Inc. also cited that trend in their quarterly financial reports this week, though both said their number of active users remained above prepandemic levels.

Separately, image-sharing company Pinterest Inc. and Roku Inc. said people have started spending less time using their products in recent weeks.

The biggest drop-off for Zynga was in users added at the start of the pandemic, the company said. Changes in Apple Inc.’s iOS operating system are also hurting, and the company warned there would be more pressure on ad revenue in the current quarter than in the previous one. Zynga has said it derived 49% of its revenue from Apple platforms and 46% of its revenue from Google platforms in 2020.

The decline in engagement and the impact of Apple’s new privacy rules led Zynga to lower its full-year guidance for bookings by 3% to $2.8 billion. Zynga also delayed the launch of “FarmVille 3” to the fourth quarter from the third, “because of the choppiness in the market,” Mr. Gibeau said. “Originally we were looking at September, but then clouds moved in,” he said. FarmVille, a social agriculture-simulation series, is one of Zynga’s oldest franchises and remains among its most popular.

To offset the declining engagement, Zynga said it is planning to host more live events in its games. The company is also counting on the many new studios it has acquired in recent years to help it attract and retain more players.

On Thursday, Zynga said it agreed to buy StarLark, the Beijing-based maker of “Golf Rival,” from Betta Games for $525 million in cash and stock. Other studios it has gobbled up in recent years include Echtra Games, Rollic and Peak Games. Zynga recently closed its purchase of mobile-advertising-services company Chartboost.

In its earnings report, Zynga called out Istanbul-based Rollic—in which it bought a controlling stake last year for $180 million—for surpassing one billion downloads. Rollic has 15 mobile games including hits such as “Hair Challenge” and “High Heels!”

Zynga said revenue climbed 59% in the second quarter from a year ago to reach $720 million. The company swung to a quarterly profit of $27.8 million, or 2 cents a share.

Write to Sarah E. Needleman at

Zynga Warns Pandemic Lift Is Ending for Videogame Companies - WSJ

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To: Glenn Petersen who wrote (356)8/12/2021 4:57:44 AM
From: Glenn Petersen
   of 358
Zynga Will Need to Beat Apple at Its Own Game

The mobile-game maker’s damaged stock is unlikely to recover until it shows it can adapt to iOS changes

By Dan Gallagher
Wall Street Journal
Updated Aug. 10, 2021 7:03 am ET

Zynga has lowered its full-year forecast for bookings, a key indicator of sales. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS

Zynga’s ZNGA -1.61% most recent results revived some painful memories. The mobile-game maker will need to work hard to make sure they are fleeting.

Late Thursday, Zynga reported $712 million in net bookings for the second quarter, up 37% year over year. That was a substantial deceleration from the 63% growth rate averaged over the previous three quarters and was also slightly under analysts’ projection of $715.7 million. Net bookings reflect the amount of in-game and advertising transactions executed during a given period. Zynga hasn’t missed Wall Street’s target for this key metric in at least five years, according to FactSet.

Zynga blamed the shortfall on a combination of reduced game-playing activity as more leisure options opened up and recent changes to Apple’s AAPL 0.18% iOS platform that make it harder to track users for the purpose of selling targeted advertising. Both were well-known risk factors before the report, but having them hit at the same time was painful. And the pain isn’t over quite yet: Zynga’s forecast for the third quarter called for net bookings to grow by only 5% year over year—its worst pace in five years. The company also trimmed its full-year bookings outlook by 3% to $2.8 billion.

Zynga’s share price slid 18% the following day—the stock’s worst single-day drop since its second quarter report in July of 2012. That date is an ominous one, as it was when the company first warned investors that changes by Facebook were hurting engagement in its social games. Given that Facebook games accounted for nearly all of Zynga’s revenue at the time, that warning marked the beginning of a serious crisis for the company. Zynga lost more than one-third its market value that day alone and the business went into a tailspin, with net bookings sliding 37% the following year.

The situation now doesn’t come close to that sort of crisis—even Zynga’s reduced forecast calls for 23% bookings growth this year. But some parallels are there. Zynga’s subsequent reorganization around mobile games has sharply revived its fortunes, but it still leaves the company somewhat vulnerable to the whims of tech titans that run the world’s dominant mobile platforms. And while Apple’s iOS powers only about 15% of smartphones sold globally each year, it is a far more lucrative platform than Google’s Android. Global spending on games in iOS totaled $25.9 billion in the first half of this year compared with $18.7 billion on Android, according to data from Sensor Tower.

Zynga’s relatively small cut to its full-year forecast suggests it is confident that it can remedy the problem soon. The company’s recent acquisition of mobile-ad firm Chartboost should help it improve its ad targeting. Zynga also intentionally scaled back ad spending on iOS following the changes to make sure its user-acquisition costs were generating an appropriate return. It also said the weakness was still limited to newer players who didn’t have a strong history of spending in the company’s games.

Wall Street is still very much on board; 94% of covering analysts rate Zynga as a buy—the highest of any videogame publisher, according to FactSet. But the company will still need to demonstrate that it can survive Apple’s bite to get investors to keep playing along.

Write to Dan Gallagher at

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the August 11, 2021, print edition.

Zynga Will Need to Beat Apple at Its Own Game - WSJ

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From: Glenn Petersen11/8/2021 6:36:34 PM
   of 358
Zynga’s Q3 2021 bookings of $668M are up 6% from a year ago

Dean Takahashi @deantak

November 8, 2021 1:05 PM

Zynga is buying StarLark and Golf Rival for $525M. / Image Credit: Zynga

Zynga beat analysts’ expectations today, reporting strong bookings and revenues in the third quarter that ended September 30 thanks to the performance of games including Rollic’s hypercasual
titles and strong ad revenue.

While Zynga beat profit and bookings targets for the quarter, its Q4 expectations fell short of where the analysts predicted on profits, even though the full year is still the best financial report in Zynga’s history.

Zynga also announced it hired former Coca-Cola game executive Matthew Wolf as its new head of blockchain gaming as it prepares for a big shift in business models. It also launched Disco Loco 3D, a new game for TikTok’s emerging game platform — Zynga’s first game on the social media platform. That follows the launch of FarmVille 3 last week, which the company said was off to a great start.

The San Francisco-based Zynga’s revenue was $705 million, up 40% year-over-year; and bookings of
$668 million, up 6% year-over-year. In after-hours trading, Zynga’s stock price is up 6% to $7.41 a share.

“We had record results ahead of guidance, our highest ever Q3 revenue and bookings,” said CEO Frank Gibeau in an interview with GamesBeat. “We were up 40% year over year in revenue, which was pretty good considering the comparisons we have coming out of COVID. We’re really seeing the multi-year growth strategy come into place and our live services have moved through the transition out of pandemic mode, and also some of the other issues related to ( Apple’s app tracking transparency) ATT. So we’re really turning the corner and starting to see growth again.”

He added, “The Rollic growth is there, the audience is up, advertisings taking off. And then we just released FarmVille 3 last week, and we go into soft launch on Star Wars: Hunters next week. The new game pipeline has never been stronger. And we’re really excited about what that’s going to do.”

Above: Zynga is buying StarLark and Golf Rival for $525M. / Image Credit: Zynga

Deal-making machine

While the pandemic has been a tragedy in lost lives and economic hardships, gaming is one of the few industries that is emerging stronger than before the coronavirus hit. People are still playing more than before, and the San Francisco firm has also benefited from its acquisitions.

Zynga has been buying aggressively under Gibeau, and the whole game industry has been following suit. In addition to StarLark and Chartboost, Zynga has been making regular acquisitions since the 2017 purchase of casual card games from Turkey’s Peak Games for $100 million. In May 2018, Zynga bought Gram Games for $250 million, followed by the late 2018 acquisition of Empires & Puzzles maker Small Giant Games for $560 million.

The big one came in June 2020 as Zynga acquired all of Peak Games for $1.8 billion. In October 2020, Zynga bought hypercasual game maker Rollic for $168 million. It took a step into PC games with the acquisition of Echtra Games, which was started by the makers of the Torchlight series. And it acquired Chartboost for $200 million. Zynga said the integration with Chartboost was making significant progress as the company creates a next-gen mobile ad platform.

During the quarter, the company added Golf Rival as a new franchise, thanks to the closing of its acquisition of China’s StarLark for $525 million.

Gibeau said the business is also growing organically, and so Zynga can walk away from deals if they get too expensive.

The addition of Wolf will help the company tackle the emerging area of blockchain games, Gibeau said. Regarding Wolf’s hiring, Gibeau said he knew Wolf back when they were at Electronic Arts together.

“We’ve been talking a lot at the board level with Mark Pincus and Bing Gordon about how NFTs will unfold,” Gibeau said. “I know it’s been a buzzword recently in terms of a lot of the releases that have come out. But we hired Matt to come in and build out our division. We think that there is a future for blockchain and NFTs in the overall interactive entertainment community. And we’re going to start to build out against that future. We love the idea of open platforms, where the players owned the content, and we participate with them in that kind of community and in that social dynamic. So for us, it’s exciting to get into the ground floor here.”

Gibeau said the company has been talking a lot about nonfungible tokens (NFTs) and blockchain, and they think there is a place for it where players can own their content.

Regarding NFTs, he said, “I think we typically like to go fast at Zynga. So I don’t think you’re going to b waiting for very long and I think what we’re going to do is let Matt get on board, put together the right kind of rollout, and start talking to you guys about our plans. We think it’s great growth opportunity and tt could have role in our new games and our live games. But it also could be a case where we build specific games for that marketplace. And so I think you’ll see us kind of look at those three opportunities.”

The company has also launched Revamp on Snapchat. The TikTok game is an interesting experiment with a new platform, but Gibeau said he did not yet expect it to produce big financial results.

“We want to see how big an audience it generates and where it’s fun,” Gibeau said.

Other Q3 details

Above: Zynga has teamed up with Girls Who Code. / Image Credit: Zynga

Gibeau said in an interview with GamesBeat that the quarter benefited from Rollic’s hypercasual games, including Arrow Fest and Text or Die. Both hit the No. 1 top free downloaded game in the U.S. iOS app store.

Small Giant Games did well, as did Words With Friends, and social casino and poker games did. Zynga is nearing the end of earnout payments to Small Giant Games and Rollic in the first quarter of 2022, and it has completed earnout payments to Gram Games.

“We’re feeling very good about performance in the quarter,” Gibeau said.

Gibeau predicts annual revenue could hit $2.78 billion and bookings of $2.814 billion. Advertising in Q3 was also a key growth contributor, hitting a record $134 million in revenue, up 99% from a year earlier. Much of that game came from Rollic, which has added a large scale to the ad business.

Looking ahead, the company expects good things from the Alliance Quest live services update in Empires & Puzzles, the Fantastic Feasts update in Harry Potter: Puzzles & Spells, Dragon Missions in Merge Dragons, and Piggy Bank in Toon Blast.

Peak Games has a match-3 title in the works called StarBlast and Gram Games has Pirate Evolution in the works.

Latest on IDFA

Above: Zynga’s Rollic is buying the Onnect matching game for $6 million. / Image Credit: Zynga

Apple changed the Identifier for Advertisers (IDFA) so that people can more easily opt-out of being tracked. That’s good for user privacy. But it makes it harder to target ads at gamers who spend money, which is what game companies have had to do in the absence of great discovery on iOS devices. Without access to IDFA data, game companies will have a harder time finding users.

Gibeau said previously that change began to have more effect as it was implemented in iOS 14.5 in April, and it became clear it was harder to target users as in the past. Now he believes the company has tried alternative ways to attract users and get them to try Zynga’s games, and the results are improving. In that way, Gibeau believes the company is putting its IDFA challenges behind it.

“It’s starting to be in the rearview mirror for us,” he said. “We had to paused our spending back in the prior quarter as we got into position for implementing new systems and new ways to acquire users and so it has improved throughout the quarter. We’ve seen good yields. We’ve been executing with new tools and we felt confident enough in our position to launch FarmVille 3. So we’re ramping the businesses as we go into the holidays, of course. There is a little bit of a lag effect from the last quarter that we need to catch up on. But overall, we feel like we’re moving onwards and upwards in the future.”

Zynga closed the quarter with close to 2,714 employees, compared with 2,476 in the previous quarter. A lot of that came from the acquisitions, and much of the company is in Asia and places like Turkey.

“It’s a very different Zynga than in years past,” Gibeau said.

Potential market reaction

Above: Zynga is part of the #PlayApartTogether campaign to boost the WHO. / Image Credit: Zynga

The stock market reaction to Zynga’s results is usually driven by whether it hits revenue or earnings targets. But it’s complicated, because Zynga is required to report some revenue later than when it actually receives it (like when a user buys in-game currency but doesn’t use it until much later). This is called deferred revenue. But if you add the changes in deferred revenue and current revenue, you get a better picture of the actual quarter’s results in a number dubbed bookings. Zynga’s management uses this number in how it guides expectations. And its investors view bookings as more important than revenues.

As a public company, Zynga is required to report quarterly results on a U.S. GAAP basis, while analysts and investors use non-GAAP financial metrics to assess a company’s underlying performance. Bookings and adjusted earnings before income tax, depreciation, and amortization (EBITDA), excluding the impact of deferred revenue, are among those metrics that are most highly scrutinized as they reflect the actual operating activity of the company better.

Here are the numbers that really matter when it comes to stock market trading for Zynga’s stock. Analysts expected Zynga to report GAAP earnings for the third quarter ended September 30 of a loss of 10 cents a share and non-GAAP EPS of a loss of 9 cents a share, and the actual non-GAAP loss came in lower than expected at 4 cents a share. Analysts expected bookings of $665 million. Zynga had guided to $660 million in bookings, and it came in at $668 million.

And it also beat the analysts’ profit targets. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is more closely watched as a measure of the company’s profitability. After adjustments, the figure that analysts focus on (adjusted EBITDA, excluding the impact of deferred revenue) of $150 million, while Zynga guided to $145 million. The comparable profit target number that Zynga hit for adjusted profits was $160 million, well above expectations.

More Q3 details

Above: Frank Gibeau is CEO of Zynga. / Image Credit: Zynga

The company had online game (or user pay) revenue of $571 million, up 31% year-over-year, and user pay bookings of $534 million, down 5% year-over-year due to a tough comparison to COVID-19 lockdowns.

The company had record average mobile daily active users (DAUs, or those who play at least once a day) of 38 million, up 21% year-over-year, and a best-ever average mobile monthly active users (MAUs, or those who play at least once a month) of 183 million, up 120% year-over-year. That increase was due to the addition of Rollic’s hypercasual games.

The company reported a net loss of $42 million, an improvement of $80 million over a year ago. This loss included a one-time cost of $67 million due to the impairment of its vacated office lease and related expenses. Zynga is moving its headquarters to San Mateo, California.

Adjusted EBITDA was $197 million, which is up $159 million from a year ago. This was primarily driven by the change in deferred revenue. The company closed the quarter with $1.3 billion in cash and investments, which it will use to fund future and existing acquisitions.

Full-year outlook

Above: Zynga bought 80% of Rollic for $168 million. / Image Credit: Zynga

In 2021, Zynga expects to deliver revenue of $2.78 billion, up 41% from a year earlier, and bookings of $2.814 billion, compared to expectations of $2.807 billion in bookings. It expects a net increase in deferred revenue of $34 million, down 88%, from a year earlier.

Zynga expects to generate a net loss of $97 million, in-line with prior guidance, and now including a charge of $67 million primarily related to the impairment of its existing San Francisco lease and related leasehold improvements.

Zynga anticipates adjusted EBITDA of $650 million. Analysts had been expecting full-year EBITDA (excluding the impact of deferred revenue) of $659.5 million.

Gibeau said the company’s new game pipeline has never been stronger with the launch of FarmVille 3 and titles like Star Wars: Hunters in soft launch in selected markets.

“This is going to be the best year we’ve ever had as a company from a revenue and bookings standpoint,” he said.

Q4 outlook

Above: Harry Potter: Puzzles & Spells is another Zynga “Forever Franchise.” / Image Credit: Zynga

For the fourth quarter ending December 31, Zynga expects revenue of $675 million, up 10% year-over-year, with bookings of $715 million, up 24% year-over-year. Analysts had been expecting bookings of $723 million in Q4 and they are expecting Zynga to report earnings per share of 9 cents for the fourth quarter ending December 31.

Zynga is being more conservative for those expectations, but Gibeau said the company is on track to have its best year ever. But it is being more conservative on the ramping of live services and ad growth for Q4. Zynga will also do more marketing spending in Q4 to boost games like FarmVille 3.

The net loss will be $60 million, while adjusted EBITDA will be $122 million. Analysts were expecting EBITDA (excluding the impact of deferred revenues) of $180.5 million for the fourth quarter, and Zynga expects it will hit $162 million in Q4 in its guidance.

“We’re a tiny bit below for the fourth quarter. But given the climb back from post-IDFA and reopening and the launches, we feel really good about where we’re at,” Gibeau said. “And, frankly, we’re set up for a really strong 2022 with all the new games live services growing, the expansion in hypercasual, and the advertising business.”

Zynga's Q3 2021 bookings of $668M are up 6% from a year ago | VentureBeat

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