Zynga Shares Tumble On Wider Q4 Loss, Weak Outlook

(RTTNews) - Social games developer Zynga Inc. (ZNGA) on Thursday reported a loss for the fourth quarter that widened from last year, as higher expenses more than offset an increase in revenues.

However, adjusted earnings results for the quarter was in line with analysts' expectations. Looking ahead, the company forecast financial results for the first quarter below Street estimates. Shares of the company declined 14 percent in extended trades.

Zynga has been posting consecutive losses, with its user base withering. The company, known for its PC games such as Farmville, generates most of its revenues from the virtual-goods purchases made by its online gamers and through ads. But the tide has now turned against it, as gamers spend more time on tablets and smartphones.

The company has been trying to battle it out by developing better mobile games for tablets and smartphones as well as cutting down on costs.

The San Francisco, California-based company's net loss for the fourth quarter widened to $45.13 million or $0.05 per share from net loss of $25.24 million or $0.03 per share in the year-ago period.

Excluding items, adjusted net loss for the quarter was $2.45 million or breakeven per share, compared to adjusted net loss of $20.83 million or $0.03 per share in the prior-year period. On average, 20 analysts polled by Thomson Reuters expected the company to report breakeven per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter rose 9 percent to $192.55 million from $176.36 million in the prior year. Analysts had a consensus revenue estimate of $201.11 million for the quarter.

Online game revenue for the quarter declined 11 percent to $135.01 million, while advertising and other revenue more than doubled to $57.54 million.

Zynga's daily active users for the quarter were 25 million, compared with 27 million in the prior year. Monthly active users slid to 108 million from 112 million in the year-ago period.

Bookings for the quarter rose 24 percent from last year to $182.4 million. Mobile bookings more than doubled and represented 60 percent of total bookings.

Total costs and expenses for the quarter rose 18 percent from the year-ago period to $241.49 million.

For fiscal 2014, Zynga's net loss for the year widened to $225.90 million or $0.26 per share from net loss of $36.98 million or $0.05 per share in the previous year. Adjusted net loss for the year was $12.58 million or $0.01 per share, compared to adjusted net loss of $34.07 million or $0.04 per share last year.

Revenues for the year declined 21 percent to $690.41 million from $873.27 million in the prior year.

Street expected the company to report loss of $0.01 per share for the year on revenues of $711.93 million.

Zynga said it is entering the mobile Action Strategy category with two new titles currently in development across NaturalMotion and Zynga.

Starting with NaturalMotion, Zynga detailed the upcoming mobile release of Dawn of Titans. Zynga is also readying the mobile launch of a modern military strategy game, Empires & Allies.

Zynga also said will expand its blockbuster FarmVille franchise - which to date has reached nearly 700 million lifetime installs since 2009 - to the Mobile Match 3 category with the upcoming launch of a new title called FarmVille: Harvest Swap.

In addition, Zynga announced the closure of its Zynga China studio. The closure will affect all 71 employees in the Beijing-based studio, and will result in an annualized cost savings of $7 million dollars.

Looking ahead to the first quarter, Zynga forecasts revenue of $155 million to $165 million, net loss of $0.07 to $0.06 per share, and adjusted net loss of $0.03 to $0.02 per share. Analysts currently expect the company to report breakeven per share on revenues of $200.87 million for the quarter.

Zynga projects first-quarter bookings of $140 million to $150 million.

ZNGA closed Thursday's trading at $2.66, down $0.15 or 5.34 percent on a volume of 55.53 million shares. In after hours, the stock further declined $0.38 or 14.29 percent to $2.28.