Zynga Poker Revenue Falls 13% to $33.6m in Q3 2018

On Wednesday, Zynga reported a mixed bag of results for its third quarter earnings. On the one hand, the social game developer saw the amount its customer spent on virtual goods climb by 17% to $248.9 million, and its revenue increase by 4% to $233.2 million overall. On the other, its adjusted earnings actually slipped by 15% to $38 million in Q3 of 2018, while net income dropped by a massive 44% to $10.2 million.

Dragging the figures lower was a slump in slots and poker player engagement caused by Facebook’s imposed platform change, although these problems have now mostly been ironed out.

How Did Cambridge Analytica Scandal Impact Earnings?

During the last quarter, Zynga suffered fallout from the Cambridge Analytica privacy scandal that rocked Facebook earlier this year. The UK-based data analytics firm managed to gain access to personal information from 87 million Facebook users after it was discovered that the social media site had failed to protect its users data. Facebook was subsequently forced to make some drastic changes to its platform and Login software, including requiring those users who had not logged in for more than 90 days to re-log-in. As Zynga CEO Frank Gibeau noted at the time:

“[Facebook] added certain prompt, it introduced some new bugs that cause players to have to re-log in, and it frankly added friction to the players experience for some of our franchise.”

Zynga Poker Decline

One of the products hit my the changes was Zynga’s online poker product. During the three month period ending September 30, the vertical reported a 13% year-over-year decline to $33.6 million, with revenue derived from mobile also falling by 3% year-on-year.

While poker still remains the biggest product in Zynga’s portfolio with a 20% share of revenues, the product has nonetheless seen its share drop from the 22% slice it commanded in Q3 of 2017. Overall, the vertical has now generated revenue of $108.7 million for the first nine months of 2018, making its earnings flat compared to the same period in 2017.

On the plus side, Zynga Poker and the World Poker Tour (WPT) announced a strategic partnership last winter, and in September launched its special WPT “tournament mode” designed to give its players “the authentic tournament style play that the World Poker Tour is known for.” As a result, players are able to take part in faster-paced tournaments at a wider range of stakes, and have the chance to win higher in-game rewards. Zynga has said that it’s optimistic its new partnership with the WPT will ultimately enable it to increase its poker players’ overall enjoyment and engagement.

Best Ever Mobile Results

Zynga reported its best ever mobile result in Q3, with the channel’s overall share of company revenue rising by 4% to a massive 91% for the quarter, up from an 87% share in the same period a year ago. Revenue derived from mobile subsequently rose by 9% to $212.5 million, while bookings also soared by 23% to $229.9 million. Mobile ads, too, hit a peak and noted a 45% year-on-year revenue surge during the quarter.

Helping the figures along was a strong performance in its evergreen titles, especially Words With Friends which saw a 42% improvement in revenue, and a 53% increase in bookings. Offsetting the results somewhat, though, was Zynga’s social slots portfolio, which reported a 9% year-over-year decline in its mobile revenue, and a 4% drop in mobile bookings versus Q3 a year ago. Summing up the overall positive trend, however, CEO Frank Gibeau commented:

“We have significantly improved the fundamentals of our business and are confident in our ability to grow profitably over the long term.”

The social game developer is expected to add a further nine new mobile games to its portfolio between now and the end of 2020. Zynga also emphasized that it was taking a rigorous approach to developing¬† and testing its new titles in order to ensure that when released they “entertain and engage players over the long term”.