Is Zynga Becoming Less Dependent on Facebook?

Just as I said yesterday, analysts have started to do their best to spell out what Facebook’s first-quarter results mean for Zynga.

In a lengthy analysis done by Robert W. Baird & Co., the investment bank suggests that Zynga may be becoming less reliant on Facebook, with more revenues coming from other platforms, like mobile.

But before diving into Baird’s analysis, it is important to note that Facebook released just enough data for there to be some insightful guesses as to what Zynga’s first-quarter earnings will look like on Thursday. However, there’s not enough information to know for sure.

In the first quarter, Facebook said, Zynga made up 11 percent of the social network’s revenue, from both advertising and the sale of virtual goods. In comparison, Facebook estimated Zynga contributed 12 percent of its revenue for all of 2011. (Note: Those percentages do not include the revenue coming from third-party advertisers on Zynga game pages.)

The analysis by Baird estimates that 88.4 percent of Zynga’s revenue came from Facebook in the first quarter, down from 93.4 percent in the fourth quarter of 2011.

Zynga’s dependence on Facebook is routinely considered a risk when evaluating the company’s stock, so it would be good news if the company’s revenue from other platforms — primarily mobile at this time — was starting to contribute more to the company’s top line. However, there’s also a chance that Zynga’s revenue from Facebook is slipping. That would be bad.

Baird believes that Zynga made roughly $230 million in virtual goods revenue on Facebook, and estimates that it also generated roughly $65 million in advertising and from transactions on platforms, like mobile. In all, that suggests a total bookings of $300 million, which falls short of the investment bank’s expectations of $320 million.

Again, these are all estimates until final numbers are released on Thursday.

The San Francisco company’s stock was trading down 50 cents, or 5.6 percent today, to $8.50 a share.

 


Latest Video

View all videos »

Search »

When AllThingsD began, we told readers we were aiming to present a fusion of new-media timeliness and energy with old-media standards for quality and ethics. And we hope you agree that we’ve done that.

— Kara Swisher and Walt Mossberg, in their farewell D post