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CSR Racing 2 and Words With Friends 2’s strong performance extends Zynga’s profit streak

Plus Willy Wonka’s Sweet Adventure in testing
CSR Racing 2 and Words With Friends 2’s strong performance extends Zynga’s profit streak

Mobile games outfit Zynga continued its turnaround into a second year announcing Q1 FY18 financials that saw GAAP revenue up seven per cent to $208.2 million year-on-year.

Zynga was also profitable for the fourth consecutive quarter with a net income of $5.6 million.

CEO Frank Gibeau said this performance was due to the company’s key games - or “forever franchises” as he likes to call them.

CSR Racing 2’s bookings were up 25 per cent compared to 12 months ago, while a revitalised Words With Friends (now including the IAP-focused Words With Friends 2) was similarly up 32 per cent.

The company’s biggest game Zynga Poker, which is played across Facebook and mobile, saw mobile bookings up seven per cent.

Something sweet

More generally, Zynga has continued to keep its costs steady while bringing more competitive gameplay and events - or “bold beats” to its existing games.

During 2017, CSR Racing 2 linked up with Lamborghini and the game will continue such activity in 2018, working with BMW to highlight its new M2 Competition car and also celebrating Porsche’s 70th anniversary.

Zynga Poker has a new licensing deal with World Poker Tour, while Zynga has launched its match-three and build game Willy Wonka’s Sweet Adventure into soft launch. New action games from NaturalMotion and Zynga’s Helsinki studio are also expected in 2018.

“We’re actively developing new games but cautiously,” Gibeau explains.

“We’re not under any pressure for growth so we can make sure we’re making high quality games that will sustain.”

Zynga is also actively working on in chat and instant games with Gibeau saying he was excited about Facebook’s addition of IAP to its Instant Games platform, as well as the potential of moves such as Google Play Instant.

He didn’t expect them to generate meaningful amounts of revenue in 2018, however, calling them “an investment in the future”.

Relinquishing control

In other Zynga news, founder and original CEO Mark Pincus is stepping back his involvement in the company.

He remains chairman of the board but now on a non-executive basis. He was previously executive chair.

More significantly, the company’s share class system has been restructured, which means Pincus moves from having 70 per cent of Zynga’s voting rights to around 10 per cent.

“It’s a reflection of my confidence in the company’s momentum,” Pincus commented.

Zynga also announced a $200 million share buyback program.

Disclosure: The author is a Zynga shareholder.

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