Zynga's revenue drops, mobile audience shrinks

Mobile gaming company to release 'Draw Something 2'

In a quarter light on new product releases, Zynga's (NASDAQ:ZNGA) revenue slid 18 percent year-over-year to $264 million. In addition the company's audience metrics dipped across the board. However, the company managed to post a $4.1 million net income, a reversal from the $85 million loss Zynga notched in the same quarter a year ago.

"2013 remains a transition year, and we continue to expect uneven, non-linear results," said Zynga CEO Mark Pincus. Wall Street had expected slightly worse first quarter results.

Zynga's daily active users (DAUs) dropped from 65 million in the year-ago quarter to 52 million in the first quarter of 2013. Monthly active users (MAUs) decreased from 292 million to 253 million, down 13 percent year-over-year and down 15 percent from 298 million in the previous quarter. Monthly unique users (MUUs) also decreased during the quarter to 150 million, an 18 percent drop year-over-year.

Source: Zynga

Mark Vranesh, Zynga's chief financial officer and chief account officer, added that with respect to mobile, DAUs were flat from the previous quarter while MAUs declined quarter-over-quarter. Last quarter Zynga announced that it had reached 72 million mobile users. However, in its first quarter, Zynga did not offer specific numbers on its mobile customer base.

Zynga's Chief Operations Officer Dave Ko echoed Pincus' comments about this quarter being a transition. "We want to make sure we're launching the right types of games that have the chance to become franchises," he said. During the first quarter, Zynga launched only two titles: Zynga Plots (for the Web) and What's the Phrase (for mobile).

During the earnings call Pincus announced that Draw Something 2 would launch later today. He also hinted at a new social title from Zynga's "With Friends" series titled Running with Friends, which could help the company capitalize on the popularity of social running apps.

"We believe growth in social gaming remains challenging. For Zynga, any hope for real, sustainable top-line growth likely rests primarily on opportunities in on-line gambling--opportunities that are at least a year away," said Sterne Agee analyst Arvind Bhatia in a statement.

Zynga, however, does not expect major bookings from its real money gambling (RMG) initiatives in the near future. "We are now expecting modest bookings from RMG this year, but we do not believe they will be significant for 2013 results," said Vranesh. Zynga recently launched mobile gambling services in the United Kingdom and has plans to offer similar services at some point in the United States.

For more:
- see this earnings release
- see this AllThingsD story
- see this WSJ live blog
- listen to this earnings webcast

Special Report: Wireless in the first quarter of 2013

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