Zynga shares fall on outlook as Don Mattrick takes over as CEO
Shares of social video game company Zynga Inc. fell more than 14% in after-hours trading after the company on Thursday gave revenue and earnings guidance that fell short of analysts’ expectations.
The San Francisco company said revenue for the third quarter will be $175 million to $200 million. That’s less than the $214.3 million analysts were expecting. Third-quarter net loss could be 2 cents a share to 5 cents a share, while analysts had expected a 2 cents-per-share loss.
The company has struggled to repeat the early success of hit games such as FarmVille and has cut staff as it turns its focus to mobile games. In a conference call with analysts, Zynga’s new Chief Executive Don Mattrick said it could take as long as a year to get the company back on track.
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Mattrick, who replaced Mark Pincus this month, said the market opportunity in social gaming is clearly growing but Zynga has been “missing out.”
“In short, we can do better,” said Mattrick. “Getting a business back on track isn’t easy and it isn’t quick. We have a lot of hard work in front of us, but I believe we can succeed as a team and Zynga can do this.”
The company reported a second-quarter loss of $15.8 million, compared with a loss of $22.8 million during the same period last year. Revenue for the quarter that ended June 30 fell 31% year-over-year to $231 million.
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The company lost users year-over-year. Monthly active users decreased 39% to 187 million in the second quarter. It has lost market share to growing competitors such as “Candy Crush” maker King.com.
Mattrick said he will use the next three months to evaluate the internal business and find ways of improving the product line.
“Zynga’s still a young company, and we have the ability to break some bad habits and get back to some good fundamentals,” Mattrick said. “My job is to get our sails up and Zynga pointed in the right direction.”
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