Zynga (ZNGA) Misses Q1 EPS by 3c, Revenue Beats, Cuts Workforce, Q2 Rev. Guidance Beats

Zynga (NASDAQ: ZNGA) reported Q1 EPS of ($0.05), $0.03 worse than the analyst estimate of ($0.02). Revenue for the quarter came in at $183 million versus the consensus estimate of $147.7 million.

Zynga sees FY2015 EPS of ($0.02), versus the consensus of ($0.02). Zynga sees FY2015 revenue of $175-190 million, versus the consensus of $156.00 million.

Cost Reduction Plan

Today, Zynga announced a cost reduction plan expected to generate pre-tax savings of approximately $100 million, excluding an estimated $18 million to $22 million pre-tax restructuring charge in the second quarter of 2015. As part of the plan, Zynga expects to complete a reduction of approximately 18% of our current workforce across its studios, including contractors, and implement additional cost reduction measures, including lowering costs and eliminating spend on outside and centralized services. Zynga expects the workforce reduction to be complete in the fourth quarter of this year and generate approximately $45 million in annualized savings. Zynga expects the reduction in centralized services costs and spend to be complete by the third quarter of 2016 and generate approximately $55 million in annualized savings. All savings estimates exclude restructuring charges.

"For our people, we need to create an empowered, entrepreneurial culture that fosters more creativity and innovation. Over the years we've seen that tighter, more nimble teams can drive faster innovation and deliver more player value," said Pincus. "As a result, today we announced a cost reduction program to focus, simplify and align us against our most promising opportunities. We expect these cost reductions to generate $100 million in annualized savings. We are reducing our workforce by 364 people or approximately 18%, decreasing our outside services and reducing our central functions. This was a hard but necessary decision and I believe this plan puts us in the best long term position for success."

For earnings history and earnings-related data on Zynga (ZNGA) click here.

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