Losses soar at Irish arm of Zynga online games firm

Pre-tax losses last year at the Irish-based international arm of online games firm Zynga increased 16-fold to $86m (€75.7m). This was on the back of revenues at Zynga International Ltd more than halving from $184.8m to $84m.
Losses soar at Irish arm of Zynga online games firm

Zynga is a leading provider of social game services and more than 1bn people have played one of their games including Farmville, Zynga Poker, and Words with Friends.

The company develops, markets and operates hosted online social games played over the internet and on social networking sites and mobile platforms, earning revenue primarily from the sale of virtual goods to the players of its online games.

According to accounts just filed by the firm to the Companies Office, the firm’s losses jumped from $5.14m to $86.7m.

The principal activity of the firm is a holding company and to support research and development activities. It also holds a license to sell online social games outside the US through subsidiary firms.

According to the directors’ report, the drop in revenues in the current year of $100m comes down to a fall in inter-company royalties due to a fall in overall sales generated by non-US intellectual property.

The company’s general and administrative expenses amounted to $161m compared with $188m in 2013. The directors said that the drop was “driven by lower cost share with Zynga Inc and is commensurate with the overall cost reduction efforts of the group”.

Established in 2007 in San Francisco, Zynga went public in December 2011 at a share price of $10. The shares have since shrunk by more than two thirds to $2.42. It has a current market capitalisation of $2.24bn.

In a post-balance sheet event, the directors’ report says that “in May 2015, Zynga Inc announced a cost reduction plan with a workforce reduction of about 366 employees or about 18% of its global workforce, and the implementation of additional cost reduction measures, including lower its spend on data-centre infrastructure”.

Accumulated losses at the firm last year rose to $268m.

However, the firm received a capital injection during the year with capital reserves rising from $11.7m to $387.7m. Shareholder funds totalled $118.76m.

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