Zynga Posts Q3 Loss, Bets On Real-Money Gaming
Struggling social games maker Zynga on Wednesday reported a loss of $52.7 million, or 7 cents a share. That compares to a profit of $12.5 million, or break-even, a year ago. Revenue, however, was up 3% to $317 million, higher than the $300 million to $305 million the company had forecast in a pre-earnings disclosure on Oct. 4.
The earnings report comes a day after Zynga announced the layoffs of 150 employees, or 5% of its staff, and the closing of studios in Boston, Japan and the U.K to reduce costs. It also pulled the plug on 13 underperforming games. That sent the company’s stock Wednesday to a 52-week low of $2.10 per share from a high of $15.91.
Zynga’s shares got a boost in after-hours trading, though, on news the board was planning the buyback of up to $200 million shares and a new partnership the company struck with bwin.party to offer real money online poker and casino games in the U.K. market. The stock had gained about 12% after the market close.
For the quarter, Zynga’s bookings declined 11% to $256 million from a year ago, and 15% from the second quarter. Earlier this month, the company reduced its revenue outlook for full-year bookings to $1.09 billion to $1.1 billion from $1.15 billion to $1.22 billion.
Underscoring Zynga’s recent difficulties producing hit games and adapting to mobile, Facebook CEO Mark Zuckerberg said the revenue coming from Zynga games on the site fell by 20% in the quarter. The share of Facebook’s total revenue coming from Zynga games like the “FarmVille” series also dropped, to 7% from 10% in the second quarter.
In a statement, Zynga CEO Mark Pincus acknowledged the company’s continued weak performance in the third quarter but stressed steps it’s taking to turn things around.
"We're addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalizing our product R&D pipeline to reflect our strategic priorities,” he said. “At the same time, we are continuing to invest in our mobile business where we have one of the strongest positions in the industry.”