Zynga Posts $400 Million Annual Loss In First-Ever Earnings Report
In its first earnings report as a publicly traded company, Zynga posted a better-than-expected profit for the fourth quarter, but a sizable net loss for all of 2011 due to its large stock-based compensation expenses. Known for it popular games such as FarmVille and CityVille, the social gaming pioneer reported adjusted earnings of $37 million, or 5 cents per share, in the three months ended December 31st on sales of $311 million. Analysts taking part in a recent Reuters poll were expecting earnings of 3 cents per share.
Despite the growing popularity of its games, Zynga's profits were eaten away last year by sizable stock awards paid out to executives. For all of 2011, Zynga posted a net loss of $404 million on sales of $1.2 billion. Nearly half of that revenue went to the company's stock-based compensation, however, which totaled $510 million. Excluding those stock awards, the company's earnings would have been $182 million, down 24 percent from its 2010 adjusted earnings. Zynga attributed the decline to increased investment into the development into new games.
Following Zynga's earnings report, released after Tuesday's closing bell, its share price fell more than 5 percent in after-hours trading. The company's "active monthly users," a closely monitored stat measuring how many people play the company's games, reached 240 million last quarter, an increase of 23 percent from the final three months of 2010. Zynga went public in December with a highly anticipated IPO that raised $1 billion, valuing the company at around $7 billion.