Zynga says engagement with videogames isn’t dropping even as life becomes more normal in places such as the U.S. and China.
Justin Sullivan/Getty ImagesZynga, the publisher of mobile videogames, reported better-than-expected financial results and disclosed plans to buy the ad-technology company Chartboost for $250 million.
Zynga reported a first-quarter net loss of $23 million, which amounts to 2 cents a share, compared with a net loss of $103.9 million, or 11 cents a share, in the year-earlier period. Revenue rose 68% to $680.3 million.
Net bookings rose 69% to $719.5 million. The figure is a common non-GAAP measure of revenue used by videogame companies that includes changes resulting from deferred revenue. Analysts had expected a loss of 4 cents a share and bookings of $684.6 million.
Shares were 2.8% higher in trading after the close.
“Everything was up,” said Chief Executive Frank Gibeau, citing strength in the company’s recently launched Harry Potter title, and the company’s live services business, among other factors. “We’re really excited about how those contributed in the quarter.”
Zynga raised its full-year guidance by $100 million, and now expects bookings of $2.9 billion. The company said it expects a net loss of $135 million. Analysts had forecast a loss of $117.2 million and bookings of $2.83 billion.
“Even as you do see large parts of the United States, and major countries like China and others going back to work, full time, we’re not seeing the drop in engagement, which is what powers our business,” Gibeau said.
The more upbeat forecast takes account of changes that Apple recent implemented in its ad-tracking technology, Gibeau said. Some investors have feared that the shift, making iPhone users opt in to allowing the third-party sites they visit online to be tracked, would hurt developers such as Zynga and Facebook’s (FB) ability to target ads.
The company said it expects a short-term impact from the move, through the third quarter, but that its teams had various technologies that will offset the issue. Gibeau said Wednesday that the Chartboost acquisition will help Zynga handle the tracking changes.
Chartboost has more than 700 million average monthly users, compared with Zynga’s 164 million, which will give Zynga access to a vast trove of behavior data that should help it target ads more effectively.
“With IDFA a first party and a third party can’t hand off the same level of data,” Gibeau said, referring to Apple’s advertising identifier, or IDFA, and the recent changes. “When you own the network completely, all the data goes, because it’s first party.”
Chartboost is a San Francisco-based venture-backed advertising businesses that has built a mobile and programmatic advertising platform. Zynga said the transaction, expected to close in the third quarter of this year, will boost its revenue. It didn’t disclose specific financial figures.
Beyond its financial contribution, Chartboost will help Zynga launch new games and features by giving it a better understanding of what is most popular among gamers.
“If we know that, and we want to launch a game, we can use that information to make a much more effective and efficient launch,” Gibeau said. “It should we lower the risk of new product introductions and new features, and new campaigns.”
Zynga said it expected a second-quarter net loss of $30 million, and bookings of $710 million. Analysts had expected a loss of $51.2 million and bookings of $695.3 million.
Shares of Zynga have advanced 12% since Barron’swrote positively about the stock in the Oct. 30 issue. The S&P 500 index gained 28% in the same period.
Write to Max A. Cherney at max.cherney@barrons.com
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