Zynga expects 15% revenue growth
With Zynga’s (ZNGA) advertising business returning to growth (with a double-digit growth rate throughout 2018) and the company continuing to invest in international expansion, its management has declared its turnaround complete.
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Though 2018 was mostly a turnaround year, Zynga has said that it expects a great start to 2019. In its first quarter, the results for which are expected to be released in the coming weeks, Zynga expects to generate $240 million in revenue, an increase of 15% YoY (year-over-year).
Zynga’s revenue rose 7.0% YoY to $208.2 million in the first quarter of 2018. Its rival game developers and publishers Electronic Arts (EA), Activision Blizzard (ATVI), and Glu Mobile (GLUU) reported revenue rises of 3.6%, 14%, and 19% YoY, respectively, in the first quarter of 2018. Revenue fell 21% YoY at Take-Two Interactive Software (TTWO) in the quarter.
Old is gold
Zynga counts on its flagship games (called its “forever franchise”), a list that includes Zynga Poker, Words with Friends, and CSR Racing 2, to support its growth. In the fourth quarter, Zynga Poker alone contributed 18% of Zynga’s total online game revenue.
A $59 million loss
As for its bottom line, Zynga is expecting to report a loss of $59 million in the first quarter, a sharp reversal from the profit of $5.6 million it reported in the first quarter of 2018. Increased operating expenses are expected to weigh on Zynga’s bottom line, particularly in light of its recent acquisitions as it absorbs the new businesses into its system.