Tomahawk, WI 7/29/2013 (Basicsmedia) – Zynga, Inc. (NASDAQ:ZNGA) released its 2Q2013 financial results Friday, beating analysts’ forecasts on both revenues and on earnings per share (EPS). However, revenues were significantly lower compared to 2Q2012. While non-GAAP EPS turned to a loss, GAAP EPS loss dropped. Gross margins and net margins improved but operating margins declined.

The revenues of Zynga for 2Q2012 were $230.74 million, down 31% from $332.49 million in 2Q2012. Analysts had estimated revenues of $224.3 million for 2Q2013. Net loss was $15.81 million or $0.02 per share, compared to a net loss of $22.81 million of $0.03 a share in the year ago period. Non-GAAP net loss was $6.13 million or $0.01 per share for 2Q2013, against a profit of $4.56 million or $0.01 per share in the same period last year. Market estimates were a loss of $0.04 per share for 2Q2013.

Gross margins were 73.5% and net margins were a negative 6.8% but both were expansions over the same period last year. However, operating margins contracted from a year ago period to a negative 13.2% in 2Q2013.

Analysts forecast revenues of $188.7 million for 3Q2013 for Zynga, with a loss per share of $0.04. For FY2013, the market estimates are $867.6 million in revenues and a loss of $0.09 per share.

Zynga announced on Friday that it will abandon its online real money gaming plan and its intention to obtain a license for that in the United States. Don Mattrick, chief executive officer of Zynga conducted a company-wide review and this decision was announced. Mattrick had taken over as CEO of Zynga only on July 1, 2013. Zynga plans to further streamline the present operations and focus more on its more immediate opportunities in boosting revenues.

However, the abandoning of U.S. online gaming plan overshadowed the market-beating top line and bottom line results for 2Q2013, resulting in negative outlook amongst the investors. Subsequently, the shares of Zynga fell by $0.49 or 14.00% on Friday to $3.01. Zynga shares were at a low of $2.13 on October 24, 2012 but have been performing better after that.

In concurrence with the above policy of focusing on immediate opportunities, Zynga had released six new gaming titles in 2Q1013. Hidden Shadows will run on web-based platforms, while War of the Fallen, Battlestone, and Running with Friends, Draw Something 2 and Solstice Arena will run on mobile platforms. At the end of Jun 30, 2013, 3 games out of the top 10 on Facebook belonged to Zynga, namely Zynga Poker, Words With Friends and Farmville 2, according to DAUs reported by Facebook API.

Zynga mentioned that combined bookings of FarmVille 2 and FarmVille grew 29% from the year ago period. Further, the two new games developed by Zynga in 2Q2013, Solstice Arena and Running with Friends, received the honours of “Editor’s Choice” of Apple. Analysts believe that Mattrick, the new CEO of Zynga, will interact with all the employees in the next 90 days and will implement meaningful changes in the coming six months to bring a turnaround in the performance of the company.

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