Update: Zynga has confirmed the layoffs via press release, as well as the numbers (520 layoffs or 18 percent of the workforce) reported by AllThingsD.
The company says this was result in $70 million to $80 million in annualized pre-tax savings. Despite those savings, its guidance for its second quarter earnings is a loss between $39 million and $28.5 million.
In a note to employees, CEO Mark Pincus described this as a “proactive” move that will “offer our teams the runway they need to take risks and develop these breakthrough new social experiences” on mobile and touchscreen devices.
My original post, which went up before the company confirmed the news, follows. I also wrote in more detail about the rationale for the cuts here.
It looks like Zynga is in the midst of laying off one-fifth of its workforce.
At the end of last week, we heard that the company would be laying off 20 percent of its worldwide staff today, and that a number of Zynga’s global offices would be affected. A Zynga spokesperson declined to comment, but we’ve seen the first public sign that the layoffs are underway: A Zynga UI designer just tweeted that Zynga L.A. will be closing, with about 55 employees let go.
This isn’t the first time Zynga has had significant cuts. Last fall, CEO Mark Pincus said the company would be reducing costs, and it subsequently laid off 5 percent of its staff. The company has also eliminated some of its less successful titles (and even some unreleased ones), though executives have also said that the number of new game launches should pick up again later this year.
As of its last quarter, Zynga had 2,902 full-time employees. That’s probably slightly off by now, but if the 20 percent number that we’ve been hearing is accurate, then around 580 employees will be affected.
Zynga’s revenue and usage statistics continued to decline in its most recent earnings report, with Pincus describing this as a “transition year” as the company shifts its focus to mobile.