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Zynga Slips To Loss On Higher Expenses, But Tops Estimate

Zynga Slips To Loss On Higher Expenses, But Tops Estimate
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4/26/2012 5:47 PM ET

Zynga Inc. (ZNGA: Quote) Thursday reported a swing to loss in the first quarter as it continued to incur hefty stock-based compensation expenses. Nonetheless, the online social games developer posted a 32 percent jump in quarterly revenue on strong bookings growth.

Excluding items, the company recorded a profit for the quarter. Both earnings and revenue for the quarter topped Street estimates.

Looking ahead, Zynga revised its outlook for the full year 2012, but kept the midpoint of the guidance intact. Zynga shares initially gained 2 percent in extended session on the Nasdaq, but later pared gains. Its stock is now down by 1.8 percent.

Zynga, which went public last December following a $1 billion initial public offering, has once again posted a loss, hurt by stock-based expenses that were previously unrecognized until triggered by its IPO.

Zynga is the world's largest developer of online social games offering games for free, while deriving revenue mainly via sale of virtual goods that enhance gaming experience. The company was founded by Mark Pincus in January 2007 and named after his late American Bulldog Zinga. Its prominent offerings include FarmVille, CityVille, CastleVille, and Zynga Poker. Zynga games are popular on Facebook and mobile platforms.

In the first quarter, daily active users of games increased 6 percent to 65 million from last year, and monthly active users surged 24 percent to 292 million. Zynga added six games during the first quarter 2012, including two titles on web-based platforms.

As of March 31, Zynga held eight of the top ten games on Facebook, including Hidden Chronicles launched in the first quarter 2012.

Zynga said its bookings in the first quarter 2012 increased to its highest ever at $329 million, up 15 percent from last year.

San Francisco, California-based Zynga incurred first-quarter net loss of $85.4 million or $0.12 per share, compared to net income of $16.8 million or breakeven per share last year.

Excluding items, adjusted earnings for the quarter were $47 million or $0.06 per share, compared to $75.4 million or $0.11 per share in the prior year.

On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.05 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter totaled to $321 million, compared to $243 million a year ago. Analysts expected revenue of $317.25 million for the quarter.

Online game revenue for the quarter rose 27 percent from a year earlier, while advertising revenue, which forms a small part of revenue, more than doubled.

Zynga now expects full year 2012 adjusted earnings of $0.23 to $0.29 per share, compared to its prior estimate of $0.24 to $0.28 per share. Analysts currently estimate earnings of $0.27 per share for the year.

The company now projects 2012 bookings to be in the range of $1.425 billion to $1.5 billion, compared to its earlier guidance of $1.35 billion to $1.45 billion.

Zynga closed Thursday at $9.42, up $0.31 or 3.40%, on a volume of 21.5 million shares on the Nasdaq. In after hours, the stock gained $0.06 or 0.64%.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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