Zynga Earnings Just More Roadkill at the Farm

Zynga, Inc. (NASDAQ: ZNGA) is lost. The company just doesn’t seem to have the muster to get back on track, and lower revenues for the second quarter and lower guidance for the rest of 2014 make this company just that much more lost.

Revenues fell to $153.2 million, short of the Thomson Reuters estimate of $191.2 million and even further from last year’s second quarter mark of $230.7 million. Even if you consider that analysts may have confused bookings and revenues, Zynga’s bookings were $175 million.

The second quarter also recorded a net loss of $62.5 million, or -$0.07 per share, after all items. The company claimed a breakeven earnings report at $0.00 per share from operations, the so-called non-GAAP report, and that actually met the consensus estimates.

Still, Zynga announced as the second tag-line in its press release that the company lowered guidance for fiscal 2014, and that it continues to invest in the game pipeline. Zynga’s outlook for the remainder of 2014 will be a period of inward reflection on the delayed launches of new games and features that were promised this year, and one where it invests in sports.

The social gaming or “freemium” gaming company grew its audience by 22% from the previous quarter in monthly active users and 12% in daily active users.

Zynga’s sports launch announcement is in it creating a new franchise brand, Zynga Sports 365, to enter the sports entertainment in football and golf. This franchise already has multi-year licensing agreements with the National Football League.

As of June 30, 2014, Zynga’s cash and cash equivalents were approximately $1.15 billion, compared to $1.14 billion as of March 31, 2014.

We could go on and on about the risks and perils of Zynga. Unfortunately, this is a situation where we don’t even view results as “less bad” than expected. They were worse than what would have already been bad had they met all estimates.

Should you be surprised we named Zynga as a brand that may not survive on its own beyond 2015?

Zynga shares closed up almost 5% ahead of earnings at $2.92, but the after-hours trading session had shares down over 7% from the closing price at $2.71 after more than one hour past the earnings report.