ZYNGA posted a surprise profit last night, as the social games developer managed to cut costs in line with its leaner revenues, but shares in the company fell dramatically as it projected further declines in the future.
The US company, famous for its Facebook-based games such as FarmVille and Texas HoldEm Poker, saw shares decline by as much as 13 per cent in after-hours trading after it said that it expects a loss of up to $36.5m (£23.9m) in the second quarter of the year.
Zynga floated in a blaze of publicity in December 2011, in an initial public offering that valued it at $7bn based on its addictive Facebook games, but the company’s expected growth has failed to materialise. Players have abandoned Zynga’s titles as more people access Facebook on their smartphones rather than desktop computers, and the company’s shares are now worth around a third of their float price.
Zynga is aiming to turn itself around by reducing its reliance on Facebook, and by moving into real money gaming. It launched its first real money poker game in the UK earlier this year.
The company’s revenues in the first quarter of the year were $264m, down from $321m a year ago. It made a $4m profit but said that revenues will fall to between $225m to $235m next quarter.