Zynga, the online games company behind Farmville, recorded revenue of $186m (£128m) in the three months to the end of 2015, down from $193m in the last quarter of 2014.
Shares in the group dropped by almost eight per cent in after hours trading.
The company's losses widened to $47m from $45m year-on-year, while bookings dipped slightly to $182.1m from $182.4m – however this was up by three per cent compared to the third quarter.
Average daily active users (DAUs) dropped by 24 per cent between the final quarter of 2014 and the fourth quarter of last year, from 24m to 18m.
Zynga was on its way to Silicon Valley Success after the triumph of Farmville in 2009, and the company continued to do well for a number of years afterwards as it released a series of relatively popular Facebook games.
However, as customers moved away from desktop games in favour of ones played on mobile devices, Zynga's fortunes took a turn for the worse – average web DAUs dropped by 49 per cent year-on-year, from 6m to 3m.
The group is still trying to turn this around, and expects to release 10 new games in 2016.
"In terms of our financial scorecard, for 2015, we made good progress in our transition to mobile on a bookings level but, due to the lack of significant new releases, we saw an overall decline in our audience," said Zynga founder and boss Mark Pincus.
"For 2016 and beyond, growth and profits will be driven by our ability to continue our momentum with live franchises and execute on new game launches. While we get that Zynga has been a show me story, in 2016, we have better visibility into our slate than ever before, with 6 new games already in soft launch.
"While we have high conviction in our ability to launch these games, the biggest challenge will be delivering on long-term retention."