There's no mystery left in this relationship.
Social gaming butterfly Zynga (NAS: ZNGA) is set to report fiscal third quarter results tomorrow, but we already know the figures won't be pretty. That's because the company announced preliminary results earlier this month, further dropping its full-year guidance in the process.
Revenue should be within the narrow range of $300 million to $305 million. That's actually slightly negative growth compared to the $306.8 million in revenue the company saw a year ago before going public. Incidentally, Q3 2011 was also the last time Zynga posted a profit, in part because going public in Q4 2011 has skyrocketed its share-based compensation expenses.
Bookings are expected between $250 million and $255 million, also down from the $287.7 million in bookings last time around. Declining bookings mean Zynga's future revenue pipeline is drying up as players purchase less virtual goods for consumption.
Zynga says it will post a GAAP net loss ranging from $90 million to $105 million. On an adjusted basis, that would turn into "only" $2 million to $5 million in red ink, or $0.00 to ($0.01) per share. That's on target with analyst estimates for this quarter.
The controversial acquisition of OMGPOP, maker of Draw Something, hasn't gone according to plan, and Zynga is eating "an estimated impairment charge between $85 million and $95 million," which is about half of what Zynga paid in the first place and nearly all of the goodwill and intangibles it recorded at the time.
The Ville, a rip-off of Electronic Arts' (NAS: EA) The Sims Social, is also doing poorly on Facebook's (NAS: FB) platform. Ironically, AppData's figures show that The Ville actually has more monthly active users, or MAUs, than The Sims Social -- 17.5 million compared to 10.4 million. However, that doesn't tell investors anything about monetization, and Zynga is reducing its expectations of the title.
With the cat already being out of the bag that this quarter is in the dumps, investors should turn their attention to any comments CEO Mark Pincus has on how he hopes to turn Zynga's fortunes. The company is transitioning away from Facebook toward mobile platforms while gearing up for an international launch of real-money gaming. Updates on these fronts will be the key takeaways.
Zynga's post-IPO performance has been dreadful, and investors are beginning to wonder if it's "game over" for this newly public company. Being so closely related to the world's largest social network can be a blessing and a curse at the same time. You can learn everything you need to know about this company and whether it's a buy or a sell in our new premium research report. Don't even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.
The article Zynga Company Earnings Preview: No Mysteries? originally appeared on Fool.com.
Evan Niu, CFA, has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Electronic Arts and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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