Zynga Q2 Loss Widens, Cuts Outlook As New Titles Delayed; Shares Down

(RTTNews) - Zynga Inc. (ZNGA) Thursday reported a second quarter loss that widened from a year ago, reflecting sharp drop in revenues as user-base continued to deteriorate. Nonetheless, adjusted earnings were in line with analysts' expectations, while revenues fell short of estimates.

Moving ahead, the struggling social-game maker lowered its financial outlook for the full year, citing delay in launch of several titles. The company's stock slipped about 6 percent in the extended trading hours, following the results.

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

Nevertheless, Zynga under CEO Don Mattrick, the former Microsoft Xbox head who took over a year ago, is now under a transformational phase as it focuses on measures to lower expenses and make better mobile games for tablets and smartphones.

The company indicated expanding into two new game categories, i.e. Sports and Runner. The company announced licensing deals with the National Football League and Tiger Woods. Zynga said its new football game, "NFL Showdown," was launched today in select markets.

Meanwhile, Zynga's daily active users plunged to 29 million year-over-year from 39 million, while monthly active users dropped to 130 million from 187 million.

San Francisco, California-based Zynga's second-quarter net loss widened to $62.5 million or $0.07 per share from $15.8 million or $0.02 per share last year.

Excluding special items, adjusted earnings improved to $2.8 million or breakeven per share, compared to an adjusted loss of $6.1 million or $0.01 per share last year. Analysts polled by Thomson Reuters expected the company to report breakeven per share for the quarter. Analysts' estimates typically exclude special items.

Zynga's revenues for the quarter plummeted 34 percent to $153.23 million from $230.74 million a year ago. Bookings, or revenues minus deferred revenues, dropped to $171.1 million from $187.6 million a year ago. Analysts estimated revenues of $191.21 million for the quarter.

Looking forward to the third quarter, the company expects adjusted loss of $0.01 to $0.00 per share and bookings of $165 million to $175 million. Analysts currently expect earnings of $0.01 per share on revenues of $212.35 million for the quarter.

Zynga lowered its full-year financial outlook to reflect the delayed launch of new games and features. For the full year 2014, Zynga now expects earnings to range from a loss of $0.01 per share to break even, compared to its previous guidance of earnings between $0.01 and $0.03 per share. Zynga now projects bookings of $695 million to $725 million, compared to previous expectation of $770 million to $810 million.

Analysts currently expect the company to earn $0.02 per share for the full year 2014.

ZNGA closed Thursday's trading at $2.92, up $0.13 or 4.66%, on the Nasdaq. However, the stock dropped $0.22 or 7.53%, in after-hours trade.