Today in Social

Zynga’s Q4 sales grew almost 60 percent to $311 million, but expenses like R&D ($445 million) and marketing ($112 million) increased much faster, and the stock was being hammered after hours. Zynga is spending a boatload on Project Z, its platform effort aimed at reducing its dependency on Facebook, and building out its own infrastructure to complement Amazon’s cloud. And social gaming remains a hit-driven business — Zynga expanded its game portfolio with its first licensed title, from Slingo. It’s also working on growing its advertising business, though that still accounts for only 9 percent of sales. Each of these strategic elements represent small progressive steps towards a long-term goal of smoothing out revenue swings while maintaining growth.

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David Card

VP Research Gigaom Research

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