Zynga Posts Record Revenue Fueled by Mobile Games

Bernard Kim - Courtesy of Zynga - Publicity-H 2019
Courtesy of Ethan Pines/Zynga

The video game company's performance over the most recent quarter was fueled by titles such as 'Empires & Puzzles' and 'Merge Dragons!'

Zynga on Wednesday posted the highest revenue in the game company's history last quarter, up to $345 million, a 48 percent bump year-over-year. The increase was driven by $328 million in revenue from its mobile game division, a 54 percent uptick from the same period last year and 95 percent of the company's total revenue.

Zynga's Empires & Puzzles and Merge Dragons! both posted record revenue over the quarter, while the company's Game of Thrones Slots Casino, which launched in June, also drove revenue.

Overall, Zynga's net income for Q3 hit $230 million. The sale of the company's San Francisco building aided the income gain. 

As a result, Zynga has raised its guidance for the remainder of the fiscal year to $1.3 billion in revenue. The company's stock price was up more than 2 percent by the closing bell and, in after-hours trading, continued the trend to a nearly four percent uptick of $6.45 per share.

Zynga, formed in 2007 and headquartered in San Francisco, currently has more than 1,800 full-time employees across the world, with offices throughout the U.S., Canada, the U.K., Ireland, India, Turkey and Finland. The company is known for franchises such as Words With Friends! and FarmVille and currently has titles in the works from license properties such as Harry Potter, Game of Thrones and Star Wars.

"We went after and licensed what we consider AAA IP that fall into our idea of forever franchises," president of publishing Bernard Kim tells The Hollywood Reporter

The new mark for Zynga comes off its strongest quarter since 2011. In Q2, the company grew revenue by 41 percent year-over-year to $306 million, with overall mobile revenue and bookings the highest in the Zynga's history, up 49 percent and 69 percent, respectively, year-over-year.

In recent years, Zynga has expanded through a series of acquisitions. This year, the company acquired an 80 percent stake in developer Small Giant Games, maker of the Empires & Puzzles mobile title, at a $700 million valuation. Other recent purchases include Gram Games, maker of Merge Dragons!, in 2018 for $250 million; and Peak Games' mobile card game studio, behind such titles as Spades Plus and Okey, in 2017 for $100 million.

"We don’t look for a specific size," CEO Frank Gibeau told investors Wedensday on an earnings call of his company's approach to acquiring studios. "Our criteria is really looking at team leadership and the nature of their franchises and the products they build."

"Our discussions with Small Giant and Gram Games stemmed from relationships we built over an extended time period before bringing them into Zynga family," says Kim. "The core reason we were interested is because we fell in love with the games that they’re building."

With the launch of game streaming services such as Google's Stadia and Microsoft's Project xCloud on the horizon, Kim says that more competition in on-the-go gaming won't hurt Zynga. "The exposure to gaming in the marketplace and having powerhouse companies like Google or Microsoft will only bring more attention to games as a medium," he asserts. "It's a positive impact."

Kim says Zynga has "nothing to announce at this time" of plans to work with either Google or Microsoft in the future on their streaming services. 

The exec voices a similar sentiment towards subscription mobile gaming services like Apple Arcade (launched by the tech giant in September). "Apple is a longtime strategic partner of Zynga’s. They are one of our top platform partners and we’ve looked at different subscription services and tested different models. We think our approach is the optimal approach," says Kim. "We're genuinely excited for anything that brings more players into gaming."

One tech company that Zynga has partnered with recently on a new venture is Snap, for which Zynga developed the battle royale game Tiny Royale as a launch title for the app's Snap Games platform. Says Kim, "We’re really excited about bringing new innovative games as a way to connect on a platform players don’t traditionally view as a games platform."