Zynga Reports Loss, But Mobile Games Strong


In its first quarterly report since going public in December, social games powerhouse Zynga posted a net loss for the fourth quarter, but beat analyst estimates for its adjusted earnings.

The company had a net loss of $435 million, or $1.22 a share. Excluding certain costs, it would have earned $37. 2 million, or 5 cents a share.

Revenue increased 59% to $311.2 million. Analysts had forecast adjusted earnings of 3 cents a share on revenue of $302 million for the quarter ending in December.

Zynga, creator of popular games such as FarmVille and Mafia Wars, pointed to continued gains in usage in the fourth quarter. It said daily active users (DAUs) increased 13% to 54 million from a year ago, while monthly active users (MAUs) rose 23% to 240 million. Average daily bookings (or revenue) per daily user rose 11% to 61 cents.



It also reported a new metric -- monthly unique payers -- which was up 13% to $2.9 million in the fourth quarter from $2.6 million in the third quarter.

Zynga’s $1 billion IPO late last year didn’t live up to the hype as its price slipped below the $10 offering price on the first day of trading. On Tuesday, however, the stock hit an all-time high of $14.55 before closing at $14.33, on rising investor sentiment.

Still, the company needs to convince Wall Street that it can expand beyond Facebook, which accounts for nearly all of its revenue and takes a 30% cut of sales it earns from the platform. Building up its mobile business is a key to Zynga’s strategy to drive growth independent of Facebook.

In that vein, the company said mobile titles Dream Zoo, Words with Friends and Zynga Poker showed strong uptake during the quarter. They were among the top 10 grossing games on iOS devices duirng the quarter, and are among the first of what are expected to be many more mobile titles from Zynga.

JP Morgan analyst Doug Anmuth expects Zynga to publish up to 15 games this year, 10 of which may be for smartphones. The company launched 12 games in 2011, including eight for mobile devices and four for the desktop Web.

In recent months, Zynga has also has acquired several mobile gaming start-ups, including the Germany-based Gamedoctors and Page44 Studios in San Francisco. In its IPO filing last year, the company had stated, "our growth prospects will suffer if we are unable to develop successful games for mobile platforms."

Looking ahead, the company projected bookings to be in the range of $1.35 billion to $1.45 billion for 2012, with stronger growth coming in the second half of the year. Adjusted net income will fall between $390 million and $440 million.

Analysts are forecasting earnings of 4 cents per share on revenue of $319 million for the current quarter ending in March. In a research note Tuesday, Anmuth said he expects strong growth at Zynga in the first quarter on the strength of newer releases, including CastleVille and Hidden Chronicles.

Zynga shares were down about 7% in after-hours trading to $13.35 on Nasdaq.

1 comment about "Zynga Reports Loss, But Mobile Games Strong".
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  1. Bill Karpen from Optimedia, February 15, 2012 at 12:07 p.m.

    Thanks for the report. Quick question - on the new "monthly unique payers" metric, did you mean to report that in dollars? Or should that be people?

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