Zynga to axe 18% of staff as Q1 figures improve
Social casino giant records 9% year-on-year increase in revenues, plans to cut 364 members of staff as part of $100m cost saving program
Social gaming giant Zynga surprised analysts this week after reporting Q1 2015 financial results that were above guidance, with revenues up 9% to $183m and bookings up 4% to $167m year-on-year.
The firm said it âcontinued to make progressâ towards being a mobile-first company with the channel accounting for 63% of total bookings during the three-month period, up 84% on 2014.
The announcement is the first since CEO Don Mattrickâs abrupt departure earlier this month, which saw Zynga founder and former CEO Mark Pincus (pictured) surprise many by jumping back into the hot seat.
While the headline figures looked good, in reality it was a quarter of mixed fortunes with adjusted EBITDA down from $13.8m last year to $2.1m.
Monthly active users also declined 16% YoY but were up 2% sequentially to 100 millon, while daily active users fell 11% YoY but increased 4% quarter-on-quarter to 25 million.
Average daily bookings per daily active user increased from $0.064 in Q1 2014 to $0.076 this year, but were down from $0.084 on the previous quarter.
Eilers Research noted that the upsides in Q1 were âlargely driven by the strength of its social casino titles [slots and poker]â which grew 14% sequentially and 55% YoY.
Eilers said growth in social casino was driven by Hit it Rich! and a full quarter contribution from Wizard of Oz Slots, and estimated that social casino titles accounted for 42% of online game revenues compared with 32% in Q1 2014.
But the real story was the firmâs decision to axe 18% of its global workforce, or 364 people, in a bid to realize annual savings of $45m as a part of a wider $100m cost reduction plan.
âFor our people, we need to create an empowered, entrepreneurial culture that fosters more creativity and innovation,â Pincus said in a statement.
âOver the years we’ve seen that tighter, more nimble teams can drive faster innovation and deliver more player value. This was a hard but necessary decision and I believe this plan puts us in the best long term position for successâ.
Zynga provided guidance on its Q2 2015 results, and estimates revenues in the range of $175m to $190m with bookings between $145m and $160m, leading to an adjusted EBITDA loss between $10m to $20m.