Zynga Loss Narrows, Reveals Job Cuts; To Acquire NaturalMotion For $527 Mln.

(RTTNews) - Shares of Zynga Inc. (ZNGA) surged 20 percent in extended hours on Thursday, after reporting a loss that narrowed from a year ago, driven largely by lower expenses, despite a sharp drop in revenue with its user-base continuing to plunge. Loss for the quarter was lesser than what analysts expected, while revenues also trumped expectations.

Zynga also revealed plans to cut 15 percent of its workforce and agreed to buy mobile game developer NaturalMotion for $527 million, as the struggling game developer strives to return to its prime.

For the past few quarters, Zynga's revenues have been trending south due to declining user base. Zynga generates majority of its revenues from the virtual-goods purchases done by its online gamers and through ads. However, the gaming company behind popular PC-based games such as Farmville is now struggling as preference of casual gamers shift to tablets and smartphones.

Zynga's daily active users plunged to 27 million from 56 million year-over-year, while monthly active users dropped to 112 million from 298 million last year.

Zynga under CEO Don Mattrick, the former Microsoft Xbox head who took over the reins in July, is now under a transformation phase as the company focuses to lower expenses and make better mobile games for tablets and smartphones. Zynga is one of the world's largest developer of online social games with offerings that include FarmVille, Words With Friends and Zynga Poker.

Zynga plans to lay off about 314 employees, which is expected to generate savings of $33 million to $35 million. As a results of the job cuts, the company expects restructuring charge of about $15 million to $17 million in first quarter.

Zynga agreed to pay $391 million in cash and 39.8 million of its shares for U.K.-based NaturalMotion. With the acquisition, Zynga will expand its game portfolio with hit games like "CSR Racing" and "Clumsy Ninja."

San Francisco, California-based Zynga's fourth-quarter loss narrowed to $25.24 million or $0.03 per share from $48.56 million or $0.06 per share last year.

Adjusted loss for the quarter was $0.03 per share compared to earnings of $0.01 per share last year. On average, 24 analysts polled by Thomson Reuters expected a loss of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Zynga's revenues for the fourth quarter plunged 43 percent to $176.36 million from $311.17 million last year. Bookings, or revenues minus deferred revenues, dropped 44 percent to $146.68 million. Seventeen analysts had a consensus revenue estimate of $141.07 million for the quarter.

Total costs and expenses for the period dropped to $203.84 million from $273.56 million last year.

Looking forward to the first quarter, the company expects a loss of $0.07 to $0.06 per share, adjusted loss of about $0.01 per share and revenues between $155 million and $165 million. Analysts currently expect a loss of $0.02 per share on revenues of $145.64 million.

For the fiscal year 2014, the company currently projects adjusted earnings of $0.01 to $0.03 per share and bookings of $760 million to $810 million. Analysts currently expect a full-year loss of $0.04 per share on revenues of 629.11 million.

ZNGA closed Thursday's trading at $3.56, up $0.14 or 4.09%, on the Nasdaq. The stock further gained $0.72 or 20.22% in after-hours trade.