Zynga Inc. (ZNGA) on Wednesday posted a loss for the first quarter from a profit last year, hurt mainly by a sharp drop in revenues as user-base continue to deteriorate. Nonetheless, loss for the quarter were in line with analysts' expectations, while revenues trumped estimates.
The struggling game maker also said its founder Mark Pincus would step down from his operational role as Chief Product Officer, but will remain as Chairman of Board. Shares of Zynga gained five percent in after-hours trade, following the news.
For the past several quarters, Zynga's revenues have been trending south due to declining user base. Zynga generates majority of its revenues from the virtual-goods purchases made 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 year-over-year to 28 million from 52 million, while monthly active users dropped to 123 million from 253 million.
The company's revenue mainly depends on three games, which together contribute about 50 percent of revenues, FarmVille, FarmVille 2 and Zynga Poker.
San Francisco, California-based Zynga reported a first-quarter loss of $61.2 million or $0.07 per share, compared to a profit of $4.1 million or breakeven per share last year.
Adjusted loss for the quarter was $6.3 million or $0.01 per share, compared to net income of $9.1 million or $0.01 per share last year. On average, 24 analysts polled by Thomson Reuters expected a loss of $0.01 per share for the quarter. Analysts' estimates typically exclude special items.
Zynga's revenues for the quarter plunged 36 percent to $168.0 million from $263.6 million last year. Bookings, or revenues minus deferred revenues, dropped 30 percent to $161.4 million from $229.8 million a year ago. Analysts expected revenues of $146.52 million for the quarter.
Looking forward to the second quarter, the company expects a loss of $0.08 to $0.07 per share, adjusted earnings of breakeven per share to $0.01 per share and revenues between $140 million and $160 million. Analysts currently expect a loss of $0.01 per share on revenues of $185.87 million.
For the fiscal year 2014, the company continues to expect adjusted earnings of $0.01 to $0.03 per share, and bookings of $770 million to $810 million. Analysts currently expect full-year earnings of $0.01 per share on revenues of $783.61 million.
Pincus resignation comes even as Chief Executive Don Mattrick is now on to hiring new executives. Zynga under CEO Don Mattrick, the former Microsoft Xbox head who took over the reins last July, is now under a transformation phase as the company is focused on lowering expenses and to make better mobile games for tablets and smartphones.
Zynga appointed Alex Garden as President of Zynga Studios. Garden, 39, joins Zynga from Microsoft, where he held the position of General Manager for Xbox LIVE and Xbox Music, Video and Reading.
Additionally, Zynga has hired Henry LaBounta as its first Chief Visual Officer and Jennifer Nuckles as its Chief Marketing Officer.
ZNGA closed Wednesday's regular trade at $4.42, down $0.14 or 3.07%, on the Nasdaq. The stock, however, gained 5.66% in after-hours trade.
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