Once the darling of the online gaming world, "FarmVille" creator Zynga is acknowledging that its daily active users were down to 52 million, the lowest number since the company went public in late 2011.
And the forecast for the company is even gloomier. CEO Mark Pincus warned on an earnings call after market close Wednesday that its second quarter bookings would decline significantly. Bookings are revenues from advertising and the virtual goods the company sells. Pincus said the decline reflects the company's shift to shut down underperforming games and to stop production on games that don't have potential to become franchises. He also cited the "challenging environment" for his whole industry.
The company warned that bookings would be in the range of $180 million to $190 million, with earnings per share loss ranging between 3 and 5 cents. Zynga shares were sharply lower Thursday morning. (For latest stock price, click here.)
The first quarter results were down from a year ago, though better than expected. Revenue came in at $230 million, $20 million more than Wall Street analysts anticipated, but still down from $329 million in the year-ago quarter. Earnings per share for the first quarter came in at a penny, 4 cents better than the loss anticipated, but down from last year's 6-cent gain.
(Read More: Zynga Earnings Beat but Outlook Disappoints)
Pincus continued to emphasize the company's name brands, announcing that "Draw Something 2" launched Wednesday night, adding that "FarmVille 2" was a "breakout hit with daily audience engagement and bookings exceeding the company's expectations."
The big question for Zynga is how quickly it will be able to cash in on real-money gaming. In response to questions from analysts on the earnings call, Pincus said: "We're excited about the whole category of social casino, especially on mobile, where we're seeing a very broad audience. … There is the growth potential in the future to bring real money gaming to these same players."
Pincus acknowledged Zynga faces"regulatory obstacles," which the company "can't predict or patrol." He cautioned that once real money gaming launches, the results could still be"unproven." But, Pincus said "we're excited about it." Investors, on the other hand, don't look quite as bullish.
—By CNBC's Julia Boorstin; Follow her on Twitter:
CORRECTION: This version corrected the spelling of Zynga in the headline.