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'Challenging Facebook environment' to blame for Zynga's $22.8 million loss in Q2 2012

Reduces Draw Something expectations

'Challenging Facebook environment' to blame for Zynga's $22.8 million loss in Q2 2012
Zynga's (NASDAQ: ZNGA) business is being squeezed on both sides, with slowing demand for the firm's Facebook games and a decline in the potency of proven mobile hits such as Draw Something driving profits down.

The social gaming giant posted a $22.8 million net loss in Q2 2012 – down from a net profit of $1.4 million during the same period in 2011 – despite a 19 percent rise in revenue to $332.5 million.

Audience on the up

Indeed, across its entire business, the number of users Zynga is pulling into its titles is on the rise, with the firm registering 72 million daily active users across the quarter – up from 59 million during Q2 2011.

Monthly active users are up too, rising from 228 million during the same period in 2011 to 306 million in the latest quarter.

"Our games reached record audiences, achieving over 300 million monthly active users," said CEO and founder Mark Pincus, also drawing attention to a 170 percent jump in Zynga's advertising revenues.

“We grew our mobile footprint five-fold in the year to 33 million daily active users making Zynga the largest mobile gaming network.

"We also faced new short-term challenges which led to a sequential decline in bookings. Despite this, we're optimistic about the long-term growth prospects on mobile where we have a window of opportunity to drive the same kind of social gaming revolution that we enabled on the web."

Draw Something droops

Zynga's desire to switch focus from Facebook to mobile is well documented, though the company claims web-games as a whole are losing popularity faster than it had expected, resulting in the firm's net loss.

That's a theme that looks set to continue throughout the rest of 2012.

“We are lowering our outlook to reflect delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something,” detailed Zynga in its financial report.

In all, Zynga has $1.6 billion in cash, cash equivalents and marketable securities – up from $1.5 billion at the end of March.

[source: GlobeNewswire]

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.