Zynga’s (ZNGA) latest quarterly results failed to reverse the downtrend in the stock market. After peaking at over $3 in December, ahead of the Dawn of Titans game release, the stock closed up just 1.2 percent on the week. Zynga lost money in the quarter despite growing revenues by 3 percent Y/Y.
User activity is mixed. Daily usage grew to 18 million (up 1%) but mobile revenue grew a healthy 20 percent Y/Y. Mobile now accounts for 81% of Zynga’s revenue. Markets correctly bid up shares of ZNGA, ahead of the Dawn of Titans game release. Made by its NaturalMotions unit, DoT will add meaningfully to the company’s revenue over time. Just do not expect revenue ramping up in just one or two quarters.
Expenses Fall
Zynga lowered its GAAP operating expenses by 8.5%, to $162.4 million. Cash flow grew to $27.7 million, up from around $3 million last year. Zynga’s transition towards the mobile market is taking shape. Bookings are growing, thanks to the game downloads on Apple’s (AAPL) iOS platform and Google (GOOGL) Play. DoT, Zynga Poker mobile and FarmVille: Tropic Escape are the primary drivers for the bookings growth.
Zynga relied less on advertising for revenue. Online game revenue accounted for $140 million, while ad revenue added to just $51 million.
Valuation and Takeaway
Zynga ended the year with $852 million. Though this is down from nearly $1 billion last year, Zynga spent $34 million buying back shares. With around a dollar per share in cash, the stock may withstand any further drop.