Zynga Shares Drop as Outlook Worries Wall Street

Zynga Inc. shares dropped yesterday as the videogame publisher’s outlook took precedence over quarterly results that topped Wall Street estimates.

For the second quarter, Zynga reported net income of $27.8 million, or 2 cents a share, compared with a loss of $150.3 million, or 16 cents a share, in the year-ago period.

Revenue rose to a record $720 million from $451.7 million in the year-ago quarter, and bookings rose to $711.9 million from $518.1 million a year ago.

Analysts surveyed by FactSet had expected a loss of 2 cents a share on revenue of $679.9 million and bookings of $718.1 million.

Average mobile daily active users grew 87% to 41 million from a year ago, Zynga reported, while analysts expected 37.2 million.

Looking ahead the company has forecast revenue of roughly $665 million and bookings of $660 million for the third quarter. Revenue is expected to be $2.73 billion and $2.8 billion for bookings.

Analysts surveyed by FactSet had expected revenue of $679.9 million and bookings of $718.1 for the third quarter, and revenue of $2.73 billion and bookings of $2.94 billion for the year.

The company also announced that it aims to reduce its physical presence in San Francisco as it keeps a hybrid workplace.

Zynga is moving to office space in San Mateo, Calif., that’s more central to its employees, while maintaining a smaller presence in San Francisco.

Chief Executive Frank Gibeau said the company has not publicly released how much money the change will save the company but said the savings will justifies the charge going forward.

Back in 2019, Zynga sold its San Francisco building to Beacon Capital for about $600 million and leased it back, a move that some on Wall Street said would provide money for acquisitions.
Shares dropped 16% after hours, following a 1.3% decline to close at $9.77.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.