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May 7, 2021, 1:23 p.m. EDT

Zynga says more people are playing mobile games even as the pandemic ends, hikes forecast

By Wallace Witkowski

Zynga Inc. reported a surge in users late Wednesday, and the videogame publisher increased its outlook for the year and announced an acquisition to bring more of its ad operations in-house.

Zynga (NAS:ZNGA) hiked its forecast because it’s still seeing user numbers climbing even as pandemic stay-at-home protocols ease, Chief Executive Frank Gibeau told MarketWatch. Average mobile daily active users rose 85% to 38 million from a year ago, while analysts expected 35.6 million, Zynga reported.

“It’s continued to go up even in places of the world that are in this transitory period pre- and post-COVID,” Gibeau said in an interview.

“Like in the U.S., where kids are going back to school, people are going back to work, things are going back to normal, people are taking their mobile games with them and we’re still seeing people engage socially for fun — from a business standpoint, they are engaging with the games,” Gibeau said. “So that’s why we raised for the year and that’s why we feel very good about the top line.”

Read: Gamers spent billions more on videogames during the pandemic, but what happens now?

Zynga reported a first-quarter loss of $23 million, or 2 cents a share, compared with a loss of $103.9 million, or 11 cents a share, in the year-ago period. Revenue rose to $680.3 million from $403.8 million in the year-ago quarter, and bookings rose to $719.5 million from $424.9 million a year ago.

Analysts surveyed by FactSet had forecast a loss of 4 cents a share on revenue of $684.6 million and bookings of $729.6 million. Zynga shares gained as much as 3.5% in choppy after-hours trading immediately after the results were announced, following a 0.5% decline in the regular session to close at $10.14. Zynga shares closed at their highest level in nine years on Feb. 19 at $12.18.

While sales and bookings notched a record for the first quarter, Zynga’s all-time record for quarterly sales and bookings came in the previous quarter, reported back in February .

Zynga forecast revenue of $675 million and bookings of $710 million for the second quarter, and raised its full-year outlook to $2.7 billion for revenue and to $2.9 billion for bookings.

Analysts surveyed by FactSet had estimated revenue of $695.3 million and bookings of $745.3 million a share for the second quarter, For the year, those analysts expect revenue of $2.83 billion and billings of $3.03 billion for the year.

Zynga also announced plans to acquire mobile advertising and monetization platform Chartboost for about $250 million in cash to bring more of its ad infrastructure in-house. The company said Chartboost already reaches a global audience of more than 700 million monthly users as well as “a broad network of advertising and publishing partners.”

“As we push more of our advertising money into Chartboost, away from other networks, we actually save money on fees and other things we pay networks to do for us because now we own it,” Gibeau told MarketWatch. “If you just looked at that aspect of it alone, over the next several years, the savings that we’ll make will more than pay for the deal.”

The deal is expected to close in the third quarter.

Late Tuesday, Activision Blizzard Inc. (NAS:ATVI) reported strong earnings and hiked its outlook for the year . Meanwhile, Electronic Arts Inc. (NAS:EA) and Take-Two Interactive Software Inc. (NAS:TTWO) are scheduled to report earnings on May 11 and May 18, respectively.

Link to MarketWatch's Slice.