Zynga cutting its workforce by 18% – laying off 520 employees to save $80 million

zynga_layoffs

Zynga today announced that it’s cutting its workforce by 18% and laying off 520 employees. The troubled company says that it’ll save between $70 and $80 million. Zynga’s CEO Mark Pincus said that the employees affected by the layoffs will receive “generous severance packages that reflect our appreciation for all of their work”. As part of the restructuring, the company will also be closing its offices in Los Angeles, New York, and Dallas. Pincus thinks that the company in on the right path: “I’m confident that our strategy of building leading franchises and supporting them with the largest network is the right one for the long term”. He also added that they are focused on expanding their popular games like ‘Running with Friends’, ‘County Fair’, ‘FarmVille’ franchise.

Below is the official press release from Zynga:

Zynga Announces Substantial Cost Reductions
Updates Outlook
SAN FRANCISCO, June 3, 2013 (GLOBE NEWSWIRE) — Zynga Inc. (Nasdaq:ZNGA), a leading provider of social game services, today announced substantial cost reductions, including a workforce reduction and closure of various office locations that will result in an estimated $70 million to $80 million in pre-tax annualized cash expense savings.

As part of these initiatives, Zynga expects to complete a reduction in force of approximately 520 employees or approximately 18% of its global workforce. The workforce reduction will occur across all functions and is expected to be substantially complete by August 2013. Zynga will record pre-tax restructuring charges of approximately $24 million to $26 million in the second quarter, and $2 million to $5 million in the third quarter. Zynga also expects to record an estimated $15 million reversal of stock-based expense in the second quarter of 2013 as a result of the net impact of these workforce reductions.

Outlook

Zynga’s updated outlook for the second quarter of 2013 is as follows:

Net loss is projected to be in the range of $39 million to $28.5 million, which is updated to reflect the impact of the actions noted above.

Bookings are projected to be in the lower half of the outlook range provided in our April 24, 2013 first quarter earnings release. While our Farmville Franchise continues to perform well, other games are underperforming.

Zynga re-affirms the second quarter 2013 outlook provided on April 24, 2013 for Revenue, EPS, Adjusted EBITDA and Non-GAAP EPS.
Zynga also re-affirms the full year 2013 outlook provided on April 24, 2013 for Adjusted EBITDA margin.

Non-GAAP Financial Measures

A discussion of non-GAAP financial measures and reconciliations of second quarter 2013 outlook non-GAAP financial measures to the most directly comparable GAAP measures are provided in our April 24, 2013 first quarter earnings release. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with generally accepted accounting principles (“GAAP”).

About Zynga Inc.

Zynga Inc. (ZNGA) is a leading provider of social game services with approximately 250 million monthly active users playing its games, which include Zynga Poker, Words With Friends, Scramble With Friends, Gems With Friends, Draw Something, FarmVille 2, ChefVille, CityVille, Bubble Safari and Ruby Blast. Zynga’s games are available on a number of global platforms, including Facebook, Zynga.com, Apple iOS and Google Android. Zynga is headquartered in San Francisco, California. Learn more about Zynga at http://blog.zynga.com or follow us on Twitter and Facebook.