Zynga sees net loss widen but reaffirms 2014 outlook
Social games company Zynga said on Thursday that its third-quarter net loss widened to $57.1 million in the third quarter as gaming revenue declined.
Shares of Zynga rose more than 6% in after-hours trading Thursday (to $2.50) after the company reaffirmed its earnings outlook for the year.
Adjusted loss per share amounted to 1 cent, matching analysts' estimates.
Its net loss totaled $57.1 million, compared to $68,000 of loss a year ago. The company's revenue fell 12 % to $176.6 million, above forecasts expected by analysts of $171.7 million in the third quarter.
Zynga expects fourth-quarter revenue of $170 million-to-$200 million, in line with expectations of $199 million, and reiterated its 2014 forecast of $695 million-to-$725 million.
"Our teams have been working hard over the last year to reshape our business and we are seeing that work show up in two important areas – our franchise bookings and mobile bookings growth," said CEO Don Mattrick in a statement accompanying the earnings release. "Last quarter, our core franchises – Casino, Words With Friends and FarmVille – grew 30% year over year in terms of bookings, and we achieved meaningful growth in mobile with a 111% increase in mobile bookings annually."
The game maker has struggled to find new hits to match the success of games such as FarmVille, Zynga Poker and Words With Friends in recent years. Zynga has the potential to increase revenue, says Piper Jaffray analyst Michael Olson, who lowered its estimated 2015 growth from 25% to 17% in a note released earlier this week.
Zynga's NFL Showdown and revamped Zynga Poker "have not fared well thus far," he said. But a new version of Words With Friends launched last month and on the way is a Tiger Woods golf game, a Looney Tunes "runner" title and new games developed with acquired developer NaturalMotion (CSR Racing, Clumsy Ninja). "We expect most on the Street will take a wait-and-see approach to the ability of these games to reach top 20 rankings," he said.