Zynga Q3 Loss Narrows, Shares Surge 12%

(RTTNews) - Zynga Inc. (ZNGA) Thursday said its loss for the third quarter narrowed from a year ago, helped mainly by lower expenses, despite a significant decline in revenues as user-base continued to deteriorate. Loss for the quarter was lesser than what analysts expected, while revenues also trumped expectations. Shares of the online social games developer rallied 12 percent in extended trading hours on the Nasdaq.

Zynga also announced the appointment of Clive Downie as its Chief Operating Officer.

For the past few quarters, Zynga's revenues have been trending downwards due to the declining user base. Zynga generates majority of its revenues from the virtual-goods purchases done by its online gamers and through ads. However, the gaming company behind popular PC-based games such as Farmville is now struggling as preference of casual gamers shift to tablets and smartphones.

Zynga's daily active users plunged a whopping 49 percent year-over-year to 30 million, while monthly active users dropped 57 percent to 133 million.

The company's revenue now mainly depends on three games, which together contribute 50 percent of total revenues, Texas HoldEm Poker, FarmVille and FarmVille 2.

Zynga's revenues for the third quarter decreased 36 percent to $202.6 million from $316.6 million last year. Bookings, or revenues minus deferred revenues, decreased 40 percent to 152.1 million. Sixteen analysts polled by Thomson Reuters expected bookings of $142.67 million for the quarter.

San Francisco, California-based Zynga's third-quarter loss narrowed to $68 thousand or breakeven per share from $52.73 million or $0.07 per share last year.

Adjusted loss for the quarter was $0.02 per share compared to breakeven per share last year. On average, 24 analysts expected a loss of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Total costs and expenses halved to $205.4 million from $413.2 million a year ago, helped largely by lower research costs, and impairment charges.

Looking forward to the fourth quarter, Zynga expects a loss of $0.04 to $0.03 per share with adjusted loss of $0.05 to $0.04 per share. Analysts currently expect a loss of $0.03 per share for the period.

Zynga expects revenues for the fourth quarter to be in a range of $175 million to $185 million with bookings of $130 million to $140 million. Analysts currently expect bookings of $147.85 million for the quarter.

Meanwhile, Zynga announced the appointment of Clive Downie as its Chief Operating Officer, effective November 4, 2013. Downie, 41, recently served as CEO of DeNA West, the American and European division of mobile social gaming service company DeNA Co., Ltd.

ZNGA closed Thursday's regular trade at $3.54, down $0.01 or 0.28%, on the Nasdaq. The stock, however, surged $0.43 or 12.02% in after hours trade.