Brief:

• Zynga saw a 46% jump in revenue to a record $503 million and a 59% gain in bookings, a measure of sales for video game companies, to $628 million in the third quarter with the addition of two acquisitions, per a quarterly announcement. Game revenue jumped 55% to $436 million while advertising revenue rose 5.8% to $67.3 million.
• The game developer, whose titles include "FarmVille" and "Words with Friends," expanded its mobile daily active user (DAU) base that rose 53% to 31 million and monthly active user (MAU) base that climbed 23% to 83 million — both six-year highs.
• Zynga attributed the growth to the additions of "Toon Blast" and "Toy Blast," which the company acquired as part of its $1.8 billion takeover of app developer Peak Games. Zynga said audience engagement was strong and that mobile average bookings per mobile DAU (ABPU) of $0.213 rose 5% from a year earlier. 

Insight:

Zynga's gains in revenue and bookings indicate that its acquisitions are starting to reap rewards as consumers play more video games on their mobile devices to keep themselves entertained during the pandemic. The acquisitions of Peak and game maker Rollic added millions of users to its customer base without having to spend heavily on app development and marketing to get noticed in app stores.

Despite the revenue gains, the company swung to a loss of $122 million from net income of $230 million a year earlier, when it sold its headquarters building and reaped $314 million in a one-time gain. Zynga also completed the acquisition of an 80% interest in Rollic for $168 million, but its results haven't been included in Zynga's reported earnings yet. With the addition of the company, Zynga forecast a Q4 loss of $92 million on a 41% gain in revenue to $570 million, while bookings will increase 55% to $670 billion, per the announcement.

Zynga also isn't finished with acquisitions, saying that it is looking for companies and franchises that it can develop further. The company's hunt for deals comes as M&A activity in the video game industry is showing signs of picking up. Tech giant Microsoft in September announced plans to buy ZeniMax for $7.5 billion in cash, one of the biggest-ever deals in the industry. ZeniMax's holdings include Bethesda Softworks, whose hit franchises include "The Elder Scrolls," "Fallout," "Wolfenstein" and "Doom." Meanwhile, electronics company Sony plans to grow organically among its 14 video game studios, though it will acquire companies selectively, Jim Ryan, CEO of Sony Interactive Entertainment, said in an interview with Reuters.

Zynga is well positioned for the holidays, with consumers this year more likely to buy digital products like mobile games. The company ended the quarter with the launch of "Harry Potter: Puzzles & Spells," a game based on the popular children's fantasy series. It also introduced "FarmVille 3" and "Puzzle Combat" in a soft launch to test new features intended to boost long-term engagement and monetization, according to its report. In the next few years, it also will release games in development based on "CityVille," the "Star Wars" sci-fi franchise and other intellectual properties.