Zynga Beats Q1 Expectations On Bookings Growth, Cost Cutting

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Zynga (NASDAQ:ZNGA) outperformed expectations on both bookings and profitability in the first quarter under its new CEO Frank Gibeau. The online gaming company’s revenues increased 2% year-over-year (y-o-y) to $187 million (against average consensus estimates of $170 million) and bookings rose over 8% y-o-y to about $182 million at the end of Q1 2016. Adjusted EBITDA increased over five times y-o-y to $11 million, against the company’s own guidance of negative $10 million to break-even.

These results were driven by a better-than-expected performance across mobile games and core franchises and a robust increase in advertising revenue. A substantial increase in monetization and a decline in total costs also helped fuel Zynga’s results during Q1, as the user base declined on both the web and mobile platform. The successful decline in operating costs can be attributed to Zynga’s cost reduction plan initiated in May 2015 whereby it intended to cut around 18% of its workforce (comprising 364 employees) and reduce spending on outside and centralized services.znga-7znga-8znga-10znga-12

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