Zynga beats Street but ditches real-money gambling license
The struggling gaming company, with revenue down 31 percent from last year, beats Wall Street's expectations, but says it will no longer pursue a gambling license in the U.S.
Zynga beat expectations for its second quarter, reporting revenues of just under $231 million, down 31 percent from a year ago, and bookings of $188 million, down 38 percent from a year ago. The company lost 1 cent per share.
Those results, however, were slightly better than Wall Street expected. Analysts had anticipated revenue of about $185 million with a loss of up to 4 cents per share.
Zynga continues to lose users. The company reported 39 million daily active users for Q2, a figure that's down 45 percent from last year. Monthly active user went down by 39 percent to 187 million.
Zynga projected a range of $175 million to $200 million in revenue for next quarter, and a loss of 5 cents per share to 2 cents per share.
The company, whichlaunched its real-money gambling games in the U.K.earlier this year, also said it's no longer going after a real-money gambling license in the U.S.:
"Zynga believes its biggest opportunity is to focus on free to play social games. While the company continues to evaluate its real-money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the United States. Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offerings."
It's a surprising move for the company considering the buzz aroundZynga's foray into real-money gambling. Industry experts often speculated that real-money online gambling games could be the company's saving grace and former CEO Mark Pincus previously said Zynga wants tobring real-money gambling to the masses.
New CEO Don Mattrick said in a press release that the company needs to "get back to basics and take a longer-term view on our products and business, develop more efficient processes, and tighten up execution all across the company. We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters."
Mattrick started at Zynga earlier this month, so he hasn't been CEO for very long. But the news of his arrival seemed to boost Wall Street's confidence in the struggling gaming company. Mattrick's move surprised -- he was in the mist of a successful run at Microsoft, leading the strategy for the Xbox, The industry is now waiting to seeif he can turn the company around.
Updated at 1:59 p.m. PT: with more analysis and information.