Zynga Posts $435 Million Quarterly Loss

"Words With Friends" Alec Baldwin - P 2011

The company says net income was wiped out due to $510 million in stock-based compensation related to its IPO.

Zynga, maker of Words With Friends and other games played on mobile devices and through Facebook, lost $435 million in the fourth quarter due to stock-based compensation triggered by its initial public offering.

Without items like the $510 million associated with its December IPO that raised $1 billion, Zynga would have earned $37 million, the company said Tuesday.

Revenue jumped 59 percent to $311 million, with online game revenue up 51 percent to $284 million and advertising revenue up 230 percent to $27 million.

Zynga said 54 million people played its games daily during the quarter, up from 48 million in the same quarter a year ago. CastleVille, which launched in the quarter, reached 7 million daily active users in just two weeks, the company boasted.

Strong growth in mobile games was driven by Words With Friends, as well as Dream Zoo and Zynga Poker.

On a per-share basis and excluding certain items related to the IPO and other events, Zynga earned a nickel while Wall Street expected just 2 cents. Nevertheless, the stock was sinking 5 percent in after-hours trading after gaining 7 percent to $14.35 during the regular session.