November 7, 2017 / 9:16 PM / 14 days ago

Zynga forecasts fourth-quarter bookings below estimates

(Reuters) - Zynga Inc (ZNGA.O), best known for creating “FarmVille”, forecast quarterly bookings below analysts’ estimates on Tuesday as declines in the game publisher’s web and older mobile games offset sequential growth in advertising sales.

FILE PHOTO - The Zynga logo is pictured at the company's headquarters in San Francisco, California April 23, 2014. REUTERS/Robert Galbraith/File Photo

The company forecast fourth-quarter bookings of $210 million, below the $223.6 million expected by analysts polled by financial data and analytics firm FactSet.

Bookings is an important metric indicating future revenue, and includes the sales of virtual goods such as currency and lives.

“What we are trying to balance is the good news - user pay and advertising ... against older games. Our web business continues to drop and it is something that we are managing,” Chief Executive Frank Gibeau told Reuters on Tuesday.

The company’s third-quarter mobile revenue, which accounted for 87 percent of the total revenue, rose 33 percent to $194.4 million.

Zynga’s average mobile daily active users were 19 million, up about 19 percent from a year earlier.

The company, which also created the popular game “Zynga Poker”, also said that it would buy the mobile card studio business of Istanbul-based Peak Games for $100 million.

The deal with Peak Games, home to successful games such as “Spades Plus” and “Gin Rummy Plus”, gives Zynga the world’s largest portfolio of casual card games.

“We see a lot of opportunities in the mobile market, it is very dynamic. So if we see opportunities ... we’ll absolutely pursue it,” Gibeau said.

However, Gibeau said that though the fourth quarter includes titles from Peak Games and the second version of its established game “Words with Friends”, launching later this week, Zynga will see a majority of the benefits from those titles in 2018.

The company reported a strong third quarter, with bookings of $213.5 million for the quarter ended Sept. 30, beating analysts’ estimate of $207.3 million, according to FactSet.

Zynga also posted its second consecutive quarter of profit, the first time since going public in 2011.

The company posted a net income of $18.1 million, or 2 cents per share, in the reported quarter, compared with a net loss of $41.7 million, or 5 cents per share, a year earlier.

The company’s advertising revenue, fell marginally in the third quarter to $46.4 million, while growing 4 percent on a sequential basis. Ad sales have fallen in the last three quarters.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Shounak Dasgupta

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