Zynga Surpasses Earnings Estimates, Acquires Mobile Game Developer Rollic

San Francisco-based mobile game developer Zynga reported a 47% increase in quarterly revenue in its second quarter, and will use some of that cash to acquire another smaller mobile game developer based in Istanbul called Rollic. Rollic is the second Turkish game developer Zynga has taken a stake in over the last two months — it bought Peak Games in June for $1.8 billion. Zynga’s president of publishing Bernard Kim told TheWrap at the time of the Peak deal that Zynga is working on expanding its foothold in eastern and Asian markets, particularly in areas like Japan and Turkey where small, indie game development shops are emerging with increasing speed. The acquisition is expected to close October 1, Zynga said. Bromberg noted that by acquiring Rollic, Zynga nearly doubles its monthly active user count. Currently Zynga has 70 million monthly active users while Rollic counts 65 million. Zynga’s popular mobile games include fantasy puzzler “Empires and Puzzles” from Small Giant Games, “Words With Friends 2,” and “Farmville.” It adds eight new games following the Rollic acquisition, including two puzzle games called “Go Knots 3D” and “Tangle Master 3D.” “We have been looking very carefully for several years now at the hyper-casual segment and have been super intrigued by the growth we’ve seen,” Zynga chief operating officer Matt Bromberg told TheWrap. “The share of installs in the marketplace has moved meaningfully towards that and it’s the fastest growing segment in the mobile games space.” Bromberg defined hyper-casual titles as mobile games like “Tangle Master 3D” that don’t have multiplayer and contain simple game mechanics that are extremely easy to learn. Zynga’s second quarter revenue surpassed its previously issued guidance and totaled $452 million, up roughly 47% from this time last year. At the same time, the game maker’s net losses during the second quarter more than doubled — it posted a $150 million net loss compared to $56 million in second quarter 2019. “On a year-over-year basis, our net loss grew by $94 million, primarily due to increased contingent consideration and income tax expense, partially offset by our improved operating performance,” Zynga noted in its earnings report. The company said the net loss posted was actually $10 million better than previously estimated for the quarter and attributed “the increase in contingent consideration expense is a function of Small Giant Games and Gram Games continuing to perform ahead of expectations.” Zynga’s mobile daily active user count jumped 4% year-over-year in the second quarter, a total of 22 million users. The company also saw user spending increase as in-game purchases were up 38% annually to $518 million for the quarter. During the earlier months of the coronavirus pandemic, Zynga recorded its peak daily active user counts. “In Q2, we saw our highest mobile daily active users in April and early May as more people sheltered-in-place. Toward the latter half of the quarter, our mobile (daily active users) started to return to levels consistent with Q1 2020,” Zynga said in its earnings report. “We are living in unprecedented times and more people than ever before are turning to games for entertainment and a sense of community… With so many of us staying at home, we saw heightened levels of player engagement, social connection and monetization in our portfolio.” Zynga’s stock was up roughly 4.8% at market close on August 5 to $10.07 per share.