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Zynga falls short of 3Q revenue and profit estimates despite big plans for new mobile games

The company has reached a deal with Disney to create a new Star Wars mobile game as well as an agreement with Warner Brothers to develop a new Harry Potter Match-3 mobile game
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Zynga’s average number of daily active users came to 22 million in the quarter

The mobile game developer Zynga Inc (NASDAQ:ZNGA) on Wednesday missed Wall Street’s third-quarter estimates for revenue and profit as record advertising and the announcement of new Star Wars and Harry Potter mobile games failed to offset weakness in Zynga Poker and other games.

In its latest quarter, the San Francisco company posted net income of $10.2 million or $0.01 per share on sales of $233.2 million. Its adjusted earnings, meanwhile, came in at $0.03 per share.

The results failed to match the expectations of analysts who had projected Zynga would earn $0.04 per share on revenue of $249.43 million.

In response, investors sent Zynga shares down 3% to $3.54 in Wednesday’s after-hours trading session.

On the company’s list of achievements in the quarter were a licensing agreement with Disney to create a new Star Wars mobile game as well as news of a new licensing agreement with Warner Brothers to develop and publish a new Harry Potter Match-3 mobile game.  A licensing agreement with HBO to produce two new Game of Thrones titles, the first of which will be a Social Casino Slots game, is also in the works.

But "Zynga Poker" faced hurdles in the quarter due to changes to the platform made by Facebook and adjustments to its in-game purchases, the company said.

Zynga’s average number of daily active users came to 22 million in the quarter, which fell short of analysts’ estimates of 24 million, but came in ahead of last year’s figure of 21 million.

Zynga’s mobile sales, which made up 91% of its total revenue, jumped 9% from last year to $212.5 million. Its record advertising revenue of $65.4 million also climbed 41% over the same period.

Despite sustained interest in older games like "Words with Friends 2" and "CSR Racing 2", Zynga reported third-quarter bookings of $248.9 million, which fell short of estimates of $249.7 million.

For the fourth quarter, Zynga now expects revenue in the range of $235 million, which is more than the $222 million being forecast by analysts.

Contact Ellen Kelleher at [email protected]



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