Zynga Edges Analyst Estimates (Update 1)

Updated from 4:45 p.m. ET to include additional information and comments from the conference call.

NEW YORK (TheStreet) -- Zynga(ZNGA) topped Wall Street's profit expectations in its first-ever quarterly report as a public company, although adjusted earnings declined from a year ago.

The maker of games like CityVille and FarmVille posted adjusted net income of $37.1 million, or 5 cents per share, in its fiscal fourth quarter, compared to net income of $63.2 million, or 9 cents per share, during the year-ago period. Revenue grew 26% year-over-year to $307 million in the three months ended Dec. 31.

Analysts were expecting earnings of 3 cents per share on revenue of $302 million for the period.

Zynga's monthly active users increased to 23% to 240 million during the quarter.

The company said it developed five of the most popular games on Facebook, although its Mafia Wars II title performed below expectations.

Zynga has tried to address criticism that its core business -- selling virtual goods through its games on Facebook's platform -- isn't growing fast enough. It's trying to expand into mobile through titles like the addictive Scrabble-like game Words With Friends.

Zynga finished the quarter with 15 million daily active users on mobile, Zynga CEO Mark Pincus said during the company's earnings call.

"Most importantly, our mobile players love our games," said chief operating officer John Schappert, the former Electronics Arts(ERTS) exec that Zynga hired away last year. "Our average rating was 4.3 stars in the Apple(AAPL) App Store this quarter."

Schappert stressed that the company is trying to diversify away from Facebook, mentioning specifically the company's recent deal with Hasbro(HAS) to develop toys based on Zynga titles.

Zynga didn't provide guidance for the current quarter, but said it expects revenue for full-year 2012 in the range of $1.35 billion to $1.45 billion with slower growth seen in the first half of the year.

"For the first quarter out of the gate they slightly exceeded guidance and provided healthy growth and margin expansion," said Colin Sebastian, an analyst with Robert W. Baird. "I'd say, so far so good."