Zynga Q4 earnings beat estimates

Social gaming company Zynga (NASDAQ:ZNGA) reported better than expected fourth-quarter earnings which beat estimates but analysts were concerned that player acquisition has slowed down.

For the fourth quarter ended December 31, profit came in at 5 cents per share on revenues of $311.2 million, up 59 percent from a year ago.

Analysts had expected a fourth-quarter profit of 3 cents per share on $302 million in sales.

Zynga's founder and CEO Mark Pincus said: "2011 was another milestone year for Zynga's mission of connecting the world through games. We are seeing social games and more broadly play become one of the most popular pastimes on web and mobile.

"Zynga set new records in the year in terms of audience size, revenues and bookings. We saw great momentum in mobile and advertising and ended the year with a strong pipeline of new games.

"We are excited about the opportunities in front of us to continue delighting our current players and to bring play to millions of new people."

Research and development costs rose nine fold from a year earlier to $444 million - representing more than half of the full-year R&D figures — as Zynga invested on new games it hopes will be big-enough hits to fuel its momentum. Headcount also rose to 2,846 at the end of 2011, up 92 percent from the prior year.

The company reported an increase in its user base and said it is seeing more users pay for virtual goods. Zynga said it experienced a 23% increase in monthly active users, ending the quarter with 240 million such users.

Zynga also reported a new metric, monthly unique payers, which it said was up 13 percent to $2.9 million in the fourth quarter, up from $2.6 million from the third quarter.

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