Locally based Facebook game production house Zynga got the tech tweeters talking after the company announced a $22.7 million second quarter loss this afternoon. In their report, Zynga blamed the loss on "delays in launching new games, ...a more challenging environment on the Facebook web platform, and reduced expectations for 'Draw Something.'”
Draw Something, which Zynga gobbled up when it bought out tiny gamemaker OMGPOP for $180 million earlier this year, started hemorrhaging users almost immediately. On the news of Zynga's losses, the company's stock plummeted to about $3.30 in after hours trading today. It was as high as $14 back in March.
To try and restore investor confidence, CEO Mark Pincus (Who was once stalked by a Russian stripper. Never forget.) touted the upcoming release of two games that you will probably see popping up in your Facebook feed any moment now.
Pincus also pointed out one area of growth for his business: revenue from ad sales is up 170%. That metric might be reassuring on an earnings call, but since ad revenue is up while growth to the company's user base is slowing, it would also appear to indicate that Zynga has figured out how to make more and more money off of all those wasted manhours individual users spend tending to their CityVilles.
All told, Zynga now expects to earn about 4 to 9 cents per share this year, compared to earlier projections of 27 cents per share. On the other hand, the company's second quarter loss could have been about $6 million larger, had the city not spared them that pesky payroll tax.