Zynga Results Top Estimates; To Trim Workforce By 18%

(RTTNews) - Social game developer Zynga Inc. (ZNGA) said Wednesday after the markets closed that its first quarter loss narrowed from last year, as revenue increased and costs and expenses fell.

The company's quarterly adjusted loss per share was also narrower than analysts estimated and its quarterly revenue beat analysts' forecast.

"In Q1, we delivered results above our guidance generating $167 million in bookings and Adjusted EBITDA of $2 million. Our Q1 results reflect the progress we have made in our transition to mobile which now represents 63% of total bookings -- up 84% year over year," said Mark Pincus, CEO of Zynga.

The company also said it is eliminating 364 employees, or about 18% of its workforce, as part of a cost reduction plan expected to generate $100 million in annualized savings. Zynga expects the job cuts to be complete in the fourth quarter of this year.

The cost reduction plan is among the first strategic decisions taken by Zynga founder and chairman Pincus since his return to the CEO role early last month.

For the first quarter ended March 31, 2015, the San Francisco, California-based company reported a net loss of $46.5 million or $0.05 per share, compared to a net loss of $61.2 million or $0.07 per share for the year-ago quarter.

Excluding items, adjusted net loss for the first quarter was $6.7 million or $0.01 per share, compared to an adjusted net loss of $6.3 million or $0.01 per share in the prior year quarter.

On average, 17 analysts polled by Thomson Reuters expected the company to report a loss of $0.02 per share for the first quarter. Analysts' estimates typically exclude special items.

Revenue for the first quarter rose 9% to $183.29 million from $168.02 million in the same quarter last year. Twelve analysts had a consensus revenue estimate of $147.72 million for the first quarter.

Online game revenue for the quarter rose 12% to $148 million, while advertising and other revenue fell 1% to $35 million. FarmVille 2, Zynga Poker, FarmVille 2: Country Escape and Hit it Rich! Slots accounted for 20%, 19%, 16% and 15% of online game revenue, respectively, for the first quarter of 2015.

Zynga's daily active users for the quarter were 25 million, compared with 28 million in the prior year. Monthly active users slid to 100 million from 119 million in the year-ago period. Bookings for the quarter rose 4% from last year to $167 million.

On May 5, Zynga launched its first mobile Action Strategy game - Empires & Allies - to global audiences.

Looking forward to the second quarter, the company forecasts revenue of $175 million to $190 million, a loss of $0.06 per share and an adjusted loss of $0.02 per share. Analysts currently expect the company to report a loss of $0.02 per share on revenue of $156.00 million for the second quarter.

Second quarter bookings are expected to be in the range of $145 million to $160 million.

Zynga shares are currently gaining 5.36% in after hours trading after closing the day's regular trading session at $2.61, up 11 cents or 4.40%. The shares trade in a 52-week range of $2.20 to $3.31.