Entertainment-starved Americans are looking for any kind of escapism in a world bereft of sports, concerts and blockbuster movies, and Zynga Inc. is benefitting.
The San Francisco-based mobile game publisher on Wednesday reported a narrowing loss and a jump in revenue, which Zynga ZNGA, +4.33% Chief Executive Frank Gibeau called “a broad-based win” in a phone interview with MarketWatch before the results were announced.
Although Gibeau acknowledged the economy is in “totally unfamiliar territory,” he said a “tremendous number of people have been reactivated back into the habit of playing,” and predicted “a lot of the momentum from shelter-in-place playing will probably” show up in the second quarter.
“People are rediscovering the value of games,” Gibeau said. “And as they think of how their lives will change, especially as states reopen, we could be seeing a fundamental shift in their game playing.”
Zynga reported a first-quarter loss of $103.9 million, or 11 cents a share, compared with a loss of $128.8 million, or 14 cents a share, in the year-ago period. Revenue zoomed 52% to $403.8 million from $265.4 million in the year-ago period. Analysts surveyed by FactSet had a loss of a penny a share on revenue of $389 million on average.
A buoyant Gibeau projected second-quarter sales of $400 million, up 31% year-over-year, with bookings of $460 million, up $84 million year-over-year. For 2020, Zynga now expects $1.65 billion in revenue, up 25% year-over-year, and $1.8 billion in bookings, up 15% year-over-year, both figures $50 million higher than the previous forecast.
Online gaming on titles like “Empires Puzzles,” “Merge Magic,” “Game of Thrones Slots Casino” and “Merge Dragons” accounted for $344 million, or 85%, of quarterly sales. Advertising chipped in another $59 million. In March, “Harry Potter: Puzzles Spells” joined “Puzzle Combat” and “FarmVille 3” in soft launch, and all three games are progressing well in test markets, GIbeau said.
Zynga stock was down 5.5% premarket Thursday, but has gained 31% in the past 12 months, while the S&P 500 index SPX, -0.69% has dipped 1.1%.