Zynga
The news comes just about a month after Zynga founder Mark Pincus announced that he'd be returning to the company as CEO.
The reduction program will be complete in the fourth quarter of this year, and the company expects to save $45 million annually as a result of the layoffs.
At the time of writing, Zynga stock is up 4.4% after hours.
Here's the bit from Zynga's earnings press release that describes the cost reduction program:
Cost Reduction Plan
Today, Zynga announced a cost reduction plan expected to generate pre-tax savings of approximately $100 million, excluding an estimated $18 million to $22 million pre-tax restructuring charge in the second quarter of 2015. As part of the plan, Zynga expects to complete a reduction of approximately 18% of our current workforce across its studios, including contractors, and implement additional cost reduction measures, including lowering costs and eliminating spend on outside and centralized services. Zynga expects the workforce reduction to be complete in the fourth quarter of this year and generate approximately $45 million in annualized savings. Zynga expects the reduction in centralized services costs and spend to be complete by the third quarter of 2016 and generate approximately $55 million in annualized savings. All savings estimates exclude restructuring charges.
"For our people, we need to create an empowered, entrepreneurial culture that fosters more creativity and innovation. Over the years we've seen that tighter, more nimble teams can drive faster innovation and deliver more player value," said Pincus. "As a result, today we announced a cost reduction program to focus, simplify and align us against our most promising opportunities. We expect these cost reductions to generate $100 million in annualized savings. We are reducing our workforce by 364 people or approximately 18%, decreasing our outside services and reducing our central functions. This was a hard but necessary decision and I believe this plan puts us in the best long term position for success."
Zynga saw a lot of success in 2007 thanks to games like Farmville and Zynga Poker, which blew up on Facebook. But, once mobile gaming took off, that success began to slow down. When Don Mattrick took over for Pincus as CEO in 2013, he tried to turn the company around by making the popularity of its games less reliant on Facebook.
Pincus recently told The New York Times that he plans to focus on analytics in order to understand why and how people are playing Zynga's games rather than just focusing on game quality.
"We need to get back to being the leader in mobile data and analytics, which leads to the best product management in our games," Pincus told The Times. "I think I bring a DNA and passion, in that respect."
Now, the company is implementing this cost reduction program and launching more mobile games in order to help the company grow.