Zynga Posts Loss In First Earnings Report
02/14/2012| 05:26pm US/Eastern
By John Letzing and Drew FitzGerald
Zynga Inc. (>> Zynga Inc) issued its first earnings report as a public company on Tuesday, posting mixed results that included a 59% gain in sales but also a loss for the period that helped whipsaw the social gaming firm's shares in late trading.
Zynga, the publisher of social games such as "Words with Friends" and "FarmVille," went public in a $1 billion offering in December, one of a number of young Internet companies to stage an IPO of late.
The San Francisco-based company reported that it swung to a loss of $435 million the fourth quarter ended in December, compared to a profit of nearly $43 million in the period a year earlier. Sales rose to $311.2 million. On an adjusted basis, earnings were 5 cents a share.
Wall Street analysts had been looking for adjusted earnings of 3 cents a share, and $302 million in revenue for the quarter.
Shares of Zynga veered in and out of positive territory in late trading, and were down about 3.1% to $13.91 an hour after the company reported results.
The shares had been on a sharp climb, rising over 52% in value from the beginning of the year to the close of the regular session Tuesday. That was based largely on Facebook Inc.'s recent disclosure that 12% of its revenue last year came courtesy of Zynga, which makes its games available via the social network.
Zynga in turn relies heavily on Facebook for nearly all of its revenue.
However, Zynga has efforts underway to wean itself from its dependence on Facebook by gaining traction on mobile phones and other platforms, which analysts and investors are watching closely.
It has also recently diversified some of its revenue by inking a licensing deal with toymaker Hasbro Inc. (>> Hasbro, Inc.).
Evercore Partners analyst Ken Sena pointed to Zynga's disclosure Tuesday that three of its games were among the top money makers on Apple Inc.'s (>> Apple Inc.) mobile software in the quarter as "a clear positive" in terms of gaining independence from Facebook.
However, Sena noted that it remains unclear what percentage of Zynga's total business is now coming through venues other than Facebook.
Overall, daily users rose 13% in the quarter to 54 million, Zynga said, while monthly users rose 23% to 240 million.
"In terms of Zynga coming out of the gate, they exceeded consensus and they're guiding to a pretty good growth number," said Robert W. Baird & Co. analyst Colin Sebastian.
Zynga provided guidance for the full year, saying it expects adjusted earnings to be between 24 and 28 cents a share. Analysts have been looking for full-year adjusted earnings of 22 cents a share, according to Thomson Reuters.
-By John Letzing, Dow Jones Newswires; 415-765-8230; firstname.lastname@example.org