Updated from 8:52 a.m. to include thoughts from Sterne Agee analyst.

NEW YORK (TheStreet) -- Zynga's (ZNGA) turnaround is taking longer than the company initially said it would, as the online games maker expands into sports and running games and hopes to capture the success it had in its early days.

San Francisco-based Zynga broke even on an adjusted basis in its second quarter, as revenue fell to $153.2 million from $230.7 million a year earlier. The company noted it generated $14 million in adjusted EBITDA during the quarter, as bookings rose sequentially to $175 million.

As of the end of June 30, Zynga had $1.149 billion in cash and cash equivalents, down from $1.541 billion as of Dec. 31, 2013.

Analysts surveyed by Thomson Reuters were expecting break-even earnings from Zynga on $191 million in revenue.

Shares were down in early trading on Friday, down 2.4% to $2.85.

"While our quarterly financial results were in line with our guidance range, we aspire to do better and improve execution across our business. Inside Zynga, we recognize that our products have the potential to live for multiple years and with nurturing, refinement and investment, they can grow and scale. We are purposefully competing, and while we would like to be further along, we believe we are making the right decisions to grow our business and unlock long term shareholder value," said CEO Don Mattrick in a press release.

Zynga lowered 2014 guidance, as it pushed out delivery of some of its games to 2015. It now expects bookings between $695 million and $725 million, below the prior forecast of $770 million to $810 million. For the third quarter, Zynga expects revenue of between $160 million and $170 million and earnings between break even and 1 cent a share.

Zynga, which has had a rough time since its initial public offering, due in large part to its heavy reliance on Facebook (FB), noted that monthly active users (MAUs) fell to 130 million, down from 187 million in the year-ago quarter but up from 123 million in the first quarter. Perhaps the company's most important metric, monthly unique payers (MUPs), came in at 1.7 million, up from 1.4 million in the first quarter of the year but down from 1.9 million in the year-ago quarter.

The company also announced it would be entering the sports category, with a game from the NFL, titled "NFL Showdown," as well as signing an exclusive deal with Tiger Woods. "NFL Showdown" is currently available in select markets and will be available everywhere before the start of the NFL season, Chief Operating Officer Clive Downie said in an interview. The Tiger Woods game, which will be available in 2015, was made because "Tiger transcended the sport, he's a global icon," Downie said. "When we think about who we want to partner with, we have to transcend not just the core of the sport, but appeal to secondary and tertiary fans who are not participating right now."

Zynga also announced it would be entering into a deal with Warner Bros. Interactive Entertainment to license the Looney Tunes brand for a new Runners game, which is expected to launch before the holiday season.

Following the earnings and the lowered guidance, analysts were largely negative on Zynga shares. Here's what a few of them had to say: 

Barclays analyst Christopher Merwin (Equal Weight, $3 PT)

"With the stock selling off in the weeks leading up to the print, Zynga followed up with 2Q results that fell short of our estimates on bookings and EBITDA. Management also lowered its full-year outlook for bookings by 10% at the midpoint, citing timing issues from a number of previously planned releases that were moved into 2H14. The silver lining, however, is that Zynga plans to expand into the sports and runners categories through exclusive deals with the NFL, Warner Bros. and Tiger Woods. We are lowering our 3Q and 2014 EBITDA estimates to reflect updated slate as well as new costs from the licensing deal. We are maintaining our Equal Weight rating and lowering our price target to $3 from $5 to reflect the likely volatility in Zynga's near-term performance as the company ramps investment into the new franchises."

Jefferies analyst Brian Pitz (Hold, $4.50 PT)

"Results and guidance were both worse than expected as Zynga shifts key titles into 2015 including Words with Friends, Poker, and several NaturalMotion games. With new license agreements, Zynga will release new NFL, Tiger Woods golf, and Looney Tunes games, which will also contribute in 2015."

Credit Suisse analyst Stephen Ju (Underperform, $3.50 PT)

"2H14 will bring the release of five new games for Zynga and as we have noted before, the primary catalyst we are waiting for is the creation of lasting new mobile franchises as it positions itself for growth. In the meantime, Zynga lowered FY14 expectations as certain games were delayed into 2015. We maintain our Underperform rating for now but with what appears to a cadence of ~ten games set for release in any given year, we have to note that the possibility of upward revisions to estimates is increasing given the more "at bats" the company will have."

BMO Capital Markets analyst Edward Williams (Market Perform, $3.25 PT)

"The company posted Q2 results that were toward the lower end of its guidance range and lower than Street expectations - bookings and adjusted EBITDA both came in behind consensus estimates. We believe the quarter's underperformance was driven by delayed launches of new games and features, as well as a steeper decline in the company's web business. The company posted sequential growth in bookings, adjusted EBITDA, mobile bookings mix and mobile audience for the second consecutive quarter, driven by its core franchises and the mobile launch of FarmVille 2: Country Escape. User metrics were up q/q across the board. We expect declines in Q3 with delayed launches, but expect to see a
rebound in Q4. Mobile bookings surpassed web bookings for the first time. The company also announced its entry into the sports category, as well as the start of licensing brands (NFL, Tiger Woods, and Looney Tunes)."

Sterne Agee analyst Arvind Bhatia (Neutral, No PT)

2Q results were below expectations, though within management's guidance range. As suspected, game delays caused management to lower full year revenue/adjusted EBITDA guidance by ~10%/40%, respectively (at the mid-point). Some of the announced titles for 2015 are based on licenses (NFL, Tiger Woods, Looney Tunes, which means lower margins on those games. All said, the head count (~2,000) seems too high relative to the current/announced titles.

-- Written by Chris Ciaccia in New York

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