Zynga Hits Earnings Target, Announces Stock Buyback
Zynga hit analysts' targets with its latest quarterly results and announced a $200 million stock buyback.
After the earnings announcement, the company's shares jumped 13 percent in trading after the closing bell. (Click here to get the latest quotes for Zynga.)
In Zynga's earnings call Wednesday afternoon, CEO Mark Pincus said the company had been unable to meet its own expectations, citing a failure to produce new game content fast enough to keep pace with rapid declines in players of existing games.
Quickly growing use of smartphones and tablets has also meant increased competition. However, Pincus also said he sees mobile as a growth opportunity, noting that Zynga's mobile game network ranks No. 4 among all apps, reaching 30% of all smartphone users.
"The real opportunity is still ahead," he said.
The company also announced its first real-money gaming deal, partnering with Gibraltar-based operator bwin.party to offer online casino games in Britain.
Zynga posted a net loss of $52.7 million, or seven cents a share, in the third quarter, down from net income of $12.5 million, or break-even on a per-share basis, a year ago.
Excluding items, the social-gaming company posted break-even third-quarter earnings, down from 4 cents a share a year earlier.
Bookings fell to $255.6 million from $287.7 million a year ago. Revenue increased 3.2 percent to $316.6 million from $306.8 million in the 2011 quarter, according to its filing with the Securities and Exchange Commission.
Analysts had expected the company to break even and deliver $256 million in bookings, according to a consensus estimate from Thomson Reuters.
Daily active users increased 10 percent to 60 million from 54 million.
Although Zynga's shares have plunged more than 75 percent since their $10 offering price in December, the company remains the No. 1 gaming company on Facebook. On Tuesday, Facebook reported earnings and revenue that beat estimates despite a decline in payments from Zynga during the quarter.
Zynga's release comes one day after Pincus, in a memo to staff, announced that the company plans to reduce its workforce by 5 percent and retire 13 games. (Read more: Zynga to Slash Staff, Retire Games)
The creator of the popular Facebook game "FarmVille" is planning to shutter its Boston studio and is considering closing its studios in Japan and the U.K., too. The company is also cutting spending, saying it will reduce spending on data hosting, advertising and outside services.
