Zynga, the social media giant, reported loses of almost 23 million in the second quarter of the current fiscal year as their shares drastically drop.
Even though revenues did climb 19% up to $332 million, they still netted a $22.8 million loss. Investors were not happy as one share of Zynga stock dropped 34 percent to a mere $3.33 in after hours trading. For the year, earnings per share are expected to drop to $0.04 from $0.09.
Because of these quarter two results, they have been forced to lower their earning estimates for the entire fiscal year. This may have been due to a quicker than expected drop off in several of their games, reduced expectations for Draw Something, and a challenging overall Facebook environment.
The waters may seem rough for Zynga, but they still managed to report increases in user activity. Daily active users increased 23 percent from 59 million in the second quarter of 2012, monthly active users increased 34 percent from 228 million in the same quarter, and the amount of unique monthly payers went up from 3.5 million from the first quarter of 2012 to the second.
Zynga CEO and founder Mark Pincus spoke to gameindustry.biz about his take on the mixed results from Q2 2012.
“The company achieved some significant milestones in the quarter including the launch of Bubble Safari, which is now the number one arcade game on Facebook, and the launch of The Ville, now the number two game behind Zynga poker,” he said. “Our advertising business continued to show strong growth with revenue up 170% year-over-year.”
“We also faced new short-term challenges which led to a sequential decline in bookings,” Pincus said. “Despite this, we’re optimistic about the long term growth prospects on mobile where we have a window of opportunity to drive the same kind of social gaming revolution that we enabled on the web.”