More Zynga job cuts as revenues fall 43%
More than 300 roles set to be made redundant as company agrees deal to buy UK mobile firm NaturalMotion
Social gaming operator Zynga has reported a 43% decrease in year-on-year revenues for Q4 2013 as the company prepares to cut more than 300 staff in a dramatic attempt to cut costs.
The job losses, estimated at 314, represent 15% of Zynga’s total workforce and are expected generate nearly US$35m in pre-tax savings. The redundancies follow a 2013 redundancy round which saw more than 500 staff lose their jobs.
The decision comes as latest figures show revenues dropped to $176m during the three-month period compared to $311m in Q4 2012. Zynga’s number of active users also declined, with DAU falling 52% year-on-year and MAUs down 62%.
However, the company was able to narrow its net losses in the quarter from $48m to $25m and outperformed the high end of its Q4 outlook with bookings of $147m and adjusted EBITDA of $3m.
Don Mattrick, who replaced founder Mark Pincus as CEO in July, said that despite announcing more losses and a declining user-base, the firm was heading in the right direction.
“Over the last seven months, our teams have been working with a sense of urgency,” Pincus said. “We finished 2013 in a strong position and expect 2014 to be a growth year.”
“We believe that Q1 will be a solid foundation for that growth and we expect substantial improvements for the remainder of the year across audience, bookings and Adjusted EBITDA,” Mattrick added. “The investments we are making to grow and sustain our franchises are beginning to bear fruit, particularly in Zynga Casino and Words With Friends.”
Amid the gloomy news, Zynga has also announced an agreement to acquire UK mobile game and technology developer NaturalMotion for approximately $527m as it looks to ramp up its mobile product offering.
NaturalMotion’s current portfolio consists of popular games including Clumsy Ninja and Mattrick said the acquisition would enable Zynga to “significantly expand” its creative pipeline and “accelerate mobile growth”.
Zynga recently launched a real-money poker product on Facebook utilising software from bwin.party. ZyngaPlusPoker is a standalone app with no direct links to Zynga’s freeplay Texas Hold’em Poker product on Facebook and is currently only available to Facebook users in the UK.