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October 05, 2012

Zynga Cuts Q3, Full Year 2012 Forecasts

By Rory Lidstone, TMCnet Contributing Writer

Zynga (News - Alert) has been having a tough time since it first went public late last year, and it appears the company's situation has just gone from bad to worse. The company behind Farmville released preliminary financial results for its third quarter ended September 30 yesterday and the numbers are not good.

Zynga is expecting revenue somewhat higher than $300 million, with bookings slightly above $250 million. As such, the company is expecting to report a net loss somewhere in the range of $100 million, GAAP. However, the company noted, this net loss includes an estimated impairment charge between $85 million and $95 million, due to the purchase of OMGPOP, the maker of Draw Something.

Zynga purchased OMGPOP in March of this year for a sum of approximately $200 million.

Image via Shutterstock

The bad news doesn't end there, though, as Zynga has also lowered its outlook for the full year 2012, to reflect these third quarter results, along with reduced expectations for the company's Web series of games and delays in the launch of several new titles. The updated outlook for the entirety of 2012 includes bookings in the range of $1.085 billion to $1.1 billion, down from previous expectations in the range of $1.150 - $1.225 billion, and adjusted EBITDA around $150 million, compared to previous projections upwards of $250 million.

"The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction," said Mark Pincus, CEO and founder, Zynga.

"We're addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalizing our product R&D pipeline to reflect our strategic priorities. At the same time, we are continuing to invest in our mobile business where we have one of the strongest positions in the industry."

Full third quarter results are expected on October 24.

In August, Zynga's then COO, John Schappert, suddenly quit the company. Speculations suggest that he left after losing control of game development.

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Edited by Brooke Neuman
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