Losses persist at social gaming provider

US social gaming provider Zynga’s new CEO, Frank Gibeau reported lower but continuing losses in the company’s Q1-2016 report this week, revealing that performance was better than expected but that a loss of $26.5 million was still incurred.

It could have been worse, he revealed, saying that cost cutting has reduced the loss by 43 percent….and he warned against too much immediate optimism, predicting that losses will likely continue in the second quarter at between $20 million and $26 million.

On a brighter note, Gibeau revealed that:

* Overall revenue rose 1 percent to $186.7 million, but game revenue declined 7 percent y-o-y to $137 million. However, compared with the last quarter of 2015 game revenue was up 6 percent;

* Advertising and other revenue was up 41 percent y-o-y in the first quarter at $50 million;

* In-game sales of virtual goods rose 8 percent year-on-year to $181.6 million, with mobile results up 31 percent to $139 million and constituting 76 percent of the total;

* Average daily sales of virtual goods per user rose year on year from 7.5 cents to 10.3 cents, but were down just over a cent compared with the preceding quarters;

* The player-to-payer conversion rate showed similar tendencies – up year-on-year to 1.7 percent (Q1-2015: 1.5 percent) but hardly changed compared with Q4-2015;

* The overall decline in active daily users will be a cause for concern – over the year there are 6 million fewer of them at 19 million. On the mobile front the loss ratio was smaller, with 3 million less players at 16 million.

* Zynga poker contributed a consistent 19 percent of game revenue in the quarter, with mobile up 13 percent y-o-y, whilst the company’s slot inventory revenues grew 13 percent to contribute 32 percent of game revenue, with the mobile component growing 77 percent.

* Top social casino slots were Hit It Rich! and the more recent Wizard of Oz, and there are new releases in the pipeline for the second quarter;

* Current cash and equivalents on hand at the San Francisco headquartered company amounts to $857 million.