Zynga Inc. (ZNGA) swung to a net loss for the quarter ended Sep. 30, 2016. The company has made a net loss of $41.74 million in the quarter, against a net profit of $3.05 million in the last year period.
Revenue during the quarter dropped 6.80 percent to $182.42 million from $195.74 million in the previous year period. Gross margin for the quarter contracted 514 basis points over the previous year period to 65.64 percent. Operating margin for the quarter stood at negative 25.38 percent as compared to a negative 4.69 percent for the previous year period.
Operating loss for the quarter was $46.30 million, compared with an operating loss of $9.18 million in the previous year period.
"In Q3, we executed well on our core business and our new launches. Our outperformance in the quarter was due to our over-delivery on CSR2 and advertising. We successfully launched two new, high quality mobile games, and our focus on our key live mobile franchises is paying off as demonstrated by the strong year-over-year growth of Zynga Poker, Social Slots and Words With Friends. As a team, we have shown good momentum in our turnaround in a number of key areas including (1) delivering new, high quality mobile games, (2) growing our existing, live mobile franchises, and (3) unlocking more operating leverage. Looking forward, we are focused on delivering mass market, high quality social games that drive long term engagement and audience growth," said Frank Gibeau, Chief Executive Officer of Zynga.
For the fourth-quarter, Zynga forecasts revenue to be in the range of $180 million to $190 million. Zynga projects net loss to be in the range of $27 million to $25 million for the fourth-quarter.
Operating cash flow turns positive
Zynga Inc. has generated cash of $32.27 million from operating activities during the nine month period as against cash outgo of $47.91 million in the last year period.
Cash flow from investing activities was $203.12 million for the nine month period, down 65.30 percent or $382.19 million, when compared with the last year period. It has incurred net capital expenditure of $3.59 million on net basis during the nine month period, down 41.18 percent or $2.51 million from year ago period.
The company has spent $108.98 million cash to carry out financing activities during the nine month period as against cash outgo of $5.27 million in the last year period.
Cash and cash equivalents stood at $866.32 million as on Sep. 30, 2016, up 30.66 percent or $203.30 million from $663.02 million on Sep. 30, 2015.
Working capital declines
Zynga Inc. has witnessed a decline in the working capital over the last year. It stood at $762.16 million as at Sep. 30, 2016, down 21.80 percent or $212.44 million from $974.60 million on Sep. 30, 2015. Current ratio was at 4.60 as on Sep. 30, 2016, down from 5.44 on Sep. 30, 2015.
Days sales outstanding went down to 41 days for the quarter compared with 42 days for the same period last year.
At the same time, days payable outstanding went down to 32 days for the quarter from 44 for the same period last year.
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