Zynga Loss Narrows, But User Base Continues To Wither

(RTTNews) - Zynga Inc. (ZNGA) on Thursday reported a second-quarter loss that narrowed from a year ago, reflecting a 30 percent jump in revenues despite continued drop in user-base. Loss for the quarter was better than what analysts expected, while revenues also trumped estimates.

Zynga has been under pressure as its user base continued to decline for past several quarters. Zynga generates majority of its revenues from the virtual-goods purchases made by its online gamers and through ads. However, the gaming company behind once very popular PC-based games such as FarmVille is now struggling as casual gamers now spend more time on tablets and smartphones.

Zynga CEO Mark Pincus is striving hard to transform the company in to a game developer focused on mobile games for tablets and smartphones.

During the quarter, Zynga daily active users plunged 23 percent year-over-year to 21 million, while monthly active users declined 32 percent to about 83 million.

San Francisco, California-based Zynga's second-quarter loss narrowed to $26.9 million or $0.03 per share from last year's loss of $62.5 million or $0.07 per share.

Excluding one-time items, adjusted loss for the quarter dropped to $0.01 per share from break even per share a year ago. On average, 17 analysts polled by Thomson Reuters estimated a loss of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.

Zynga's revenues for the second quarter jumped 30 percent to $199.9 million from $153.2 million a year ago. Bookings or revenues minus deferred revenues, which is a closely watched metric, dropped to $174.5 million from $175.1 million last year. Analysts estimated revenues of $156.8 million for the quarter.

CFO David Lee said, "The biggest drivers of our mobile growth were our Slots franchise, which grew 32% sequentially, and the launches of Empires & Allies and FarmVille: Harvest Swap."

Looking forward to the third quarter, the company expects adjusted loss of $0.02 to $0.01 per share and bookings of $155 million to $170 million. Analysts currently expect earnings to be break even per share on revenues of $174.8 million.

Zynga also announced the appointment of Frank Gibeau to its board. Gibeau is a former executive at Electronic Arts Inc.

ZNGA closed Thursday's trading at $2.45, down $0.06 or 2.39%, on the Nasdaq. The stock, however, gained $0.01 or 0.41%, in the after-hours trade.