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Zynga Inc.’s stock bounced back Monday afternoon, after the videogame publisher said it expects growing ad revenue, along with a new version of “Farmville,” to drive growth in 2022.
“Advertising has really picked up a lot of steam,” Zynga Chief Executive Frank Gibeau told MarketWatch in an interview ahead of the release of the company’s third-quarter earnings report Monday.
While online gaming revenue rose 31% to $571.1 million, Zynga’s fastest-growing segment was built-in game ad revenue, which nearly doubled to a record $133.6 million. One of the things that Zynga pitches to its advertisers is so -called “watch to earn” ads, where players earn in-game currency or energy for watching the ad to completion.
“What’s great about it is that you actually get value for it,” Gibeau said.
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reported a third-quarter loss of $41.7 million, or 4 cents a share, compared with a loss of $122.2 million, or 11 cents a share, in the year-ago period. Results included a $67 million one-time charge from the company vacating its lease on San Francisco office space. Revenue rose to $704.7 million from $503.3 million in the year-ago quarter, and bookings rose to $667.7 million from $628 million a year ago.
Analysts surveyed by FactSet had forecast a loss of 9 cents a share on revenue of $663.6 million and bookings of $667.2 million, based on Zynga’s forecast of about $665 million in revenue and about $660 million in bookings. Zynga reported average mobile daily active users rose 21% to 38 million from a year ago.
Zynga also said Matthew Bromberg, its chief operating officer, is resigning. Bromberg joined the company in 2016 and is expected to stay onboard through March 2022 to aid in the transition. A successor was not named.
Shares closed the regular session up 1.3% at $6.99, rising a few cents from their lowest closing level since April 2020, established on Friday. Zynga shares closed at their highest level in nine years on Feb. 19 at $12.18, but have been hit hard since a disappointing forecast in the last earnings report.
The stock jumped nearly 7% in after-hours trading Monday.
Zynga forecast revenue of about $675 million and bookings of $715 million for the fourth quarter, and a record $2.78 billion in revenue and $2.81 billion in bookings for the year. Analysts surveyed by FactSet had estimated revenue of $663.6 million and bookings of $716.5 for the fourth quarter, and revenue of $2.75 billion and bookings of $2.81 billion for the year.
For 2022, Zynga forecast “low double-digit” growth, driven by its live services and full-year contributions of games like “Farmville 3,” which was recently released, “Golf Rival” from its recent acquisition of Beijing-based StarLark, and from Rollic, the Istanbul-based hyper-casual games publisher in which it acquired an 80% stake. Analysts expect 12% revenue growth in 2022.
