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Zynga
Shares plunged in the extended session on Thursday, after the company reported people were spending less time playing mobile games as economies in the United States and elsewhere begin to reopen.
Zynga (ticker: ZNGA), which owns gaming brands like Farmville and Words With Friends, reported surprise second-quarter earnings, but missed consensus estimates for revenue on an adjusted basis and lowered expectations for the rest of the year.
Zynga stock fell 15% in extended trading.
As Covid-19 restrictions began to recede in May and June, some of the players Zynga recruited earlier this year have started to decline, CEO Frank Gibeau said. Related to this, the number of daily active users has also decreased.
“Basically they just played less – they were going outside or whatever they were doing – and it started showing,” he said.
The games publisher reported second quarter net profit of $ 27.8 million, which was 2 cents per share, compared with a loss of $ 150.3 million, or 16 cents per share, during the period of the previous year. Revenue increased 59% to $ 720 million.
Zynga reported second-quarter net bookings increased 37% to $ 712 million. Net bookings are non-GAAP figures commonly used by the video game industry that include the impact of deferred revenue.
Analysts expected a second quarter net loss of $ 40.7 million, or 2 cents a share, on reservations of $ 716.3 million.
Gibeau said July is generally a hectic month for its mobile game franchises. But coupled with a reopening after months of confinement, and a change
Apple
(AAPL) brought to the follow-up of its applications, weighed on the prospects of the company. Zynga’s daily active user count increased from 2 million to 41 million sequentially, although the company said the 87% year-over-year growth was mainly due to its portfolio from its Rollic acquisition.
“We’re still up 23% year-over-year from a very difficult comparison, so the business is healthy,” Gibeau said. “The adjustment on the top line is the result of a dynamic that we believe is short-term in nature.”
For the full year, Zynga lowered its revenue forecast by 3%. The company has now said it expects a net loss of $ 135 million on bookings of $ 2.8 billion. Consensus predicted a loss of 9 cents a share on reservations of $ 2.9 billion.
Zynga said it expected a net loss of $ 110 million in the third quarter and bookings of $ 660 million. Wall Street expected a net loss of 4 cents per share in the third quarter, on reservations of $ 721 million.
Separately, Zynga said it was acquiring StarLark for $ 525 million in cash and stock. StarLark is a mobile video game developer known for Golf rival. The deal is expected to be finalized in the fourth quarter of this year.
Gibeau said the acquisition is part of the company’s strategy to increase its presence in Asia. “One of the keys, in our opinion, is to have development in the region,” he said.
Keybanc analyst Tyler Parker warned in July that based on the bank’s proprietary data, Zynga’s second-quarter earnings could disappoint. Despite the potential problem, he maintained his overweight rating.
Zynga stock fell 1.3% on Thursday to close the regular session at $ 9.77.
Write to Max A. Cherney at [email protected]
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