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Zynga's Earnings: No Profit, Layoffs, And A $527 Million Acquisition Of NaturalMotion

Maker of crowd-pleasers such as Clumsy Ninja and CSR Racing, NaturalMotion represents a new wave of gaming using artificial intelligence and 3-D animation.

[Image: NaturalMotion]

Zynga couldn't wait to get the news out. The social gaming company had originally scheduled Feb. 6 to announce its quarterly earnings, but decided at the last minute to move its call to Thursday after markets closed to coincide with news of its $527 million acquisition of Oxford-based mobile gaming company NaturalMotion.

Maker of crowd-pleasers such as Clumsy Ninja, NaturalMotion has been around since 2001 and represents a new wave of gaming using artificial intelligence and 3-D animation—a huge signal for what's to come at ailing Zynga, which also announced a 15% reduction in its workforce. The layoffs could save it $33 million to $35 million before taxes in 2014.

NaturalMotion CEO Torsten Reil had told Fast Company that the game maker is hoping to revitalize lagging game genres with its technology, as it had done with character-driven games, which led to the creation of Clumsy Ninja, and racing games on mobile. CSR Racing, one of its most popular games, brings in $12 million a month.

"It is really exciting to see the combination of these two great companies," Reil, who has known Zynga CEO Don Mattrick since the '90s, said in a blog post. "NaturalMotion will provide Don with a fantastic slate of mobile products (both new, innovative ones, as well as sequels of their current hits). Combined with Zynga’s reach, social networking expertise, and advanced audience measurement tools, NaturalMotion and Zynga should be a very potent combination."

In the fourth quarter, Zynga lost $25.2 million, barely beating analyst expectations and faring better than the $48.6 million loss in the same period a year prior. In 2013, the company grossed $873.3 million in revenue, down from $1.3 billion in 2012, but saw a net loss of $37 million, an improvement over $209.4 million last year.

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