By Jon Swartz
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 /zigman2/quotes/209662259/composite ZNGA -1.40% 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.
Zynga’s boost in sales follows similar reports from larger game makers Electronic Arts Inc. /zigman2/quotes/206954087/composite EA -1.07% and Activision Blizzard Inc. /zigman2/quotes/200717283/composite ATVI -1.39% , both of whom reported strong sales on Tuesday.
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“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 /zigman2/quotes/210599714/realtime SPX +0.22% has dipped 1.1%.