Zynga Inc. raised the lower end of its 2012 earnings outlook after quarterly revenue beat Wall Street's rock-bottom expectations, driving its shares 12 per cent higher.
The games publisher also announced a $200-million (U.S.) share buyback program and said it has begun a cost reduction plan expected to yield $15-million to $20-million in pretax savings.
The news proved a rare bright spot for Zynga, which is trying to stave off user losses that prompted it to slash its 2012 outlook twice in recent months.
The creator of FarmVille also announced Wednesday a deal with British firm bwin.party to offer online real-money gambling in the United Kingdom.
"On the margin these are positive things," said Arvind Bhatia, an analyst with Sterne Agee. "But fundamentally they'll still have to turn around the business. I'm not so sure these are necessarily enough to get this stock going much higher."
Even taking into account the after-hours share rally, Zynga would still have lost three-quarters of its market value since debuting in 2011 at $10.
Chief executive officer Mark Pincus has not assuaged most investors' concerns that, while a dominant platform on Facebook and the Internet, Zynga lacks games that appeal to a growing mobile device user base.
Zynga recorded bookings of $256-million from July through September, the worst quarterly performance since late 2010 when the company was still enjoying a meteoric ascent toward its December, 2011, initial public offering.
Average daily bookings per average daily active user, a metric that roughly measures how much revenue the company squeezes out of each gamer, dropped sharply to $0.047, a decrease of 11 per cent from a year prior.
Quarterly revenue rose to $317-million, an increase of 3 per cent from a year ago. The company revised its full-year adjusted earnings to between $152-million and $162-million, up from $147-million and $162-million.
The games maker, which has been fighting to reverse a dramatic exodus of players, had cut its 2012 earnings forecast most recently on Oct. 4 when it warned investors its top line would be affected by poor performance in core money-making Internet games like CityVille.
Zynga's stock was up at $2.39 in extended trade after closing at $2.129 on the Nasdaq.