Social game maker Zynga, known for its popular "FarmVille" title, said Thursday it would cut 15 percent of its workforce, at the same time surprising Wall Street with a quarterly loss that beat expectations.
It also announced it is buying a U.K.-based mobile game company.
Zynga, once among the hottest tech companies with rapid revenue growth from popular Facebook-based games, was caught off guard as the games industry saw a boom in mobile games. The company has renewed its focus on transitioning to smartphones and tablet titles, the increasingly preferred format for casual gamers.
"We took layers out of the reporting structure, we got more focus, more discipline," CEO Don Mattrick said in announcing the cut of 314 employees. "We feel like we've made a lot of progress to achieve future growth in 2014."
A week ahead of its scheduled earnings announcement, Zynga posted fourth-quarter revenue of $147 million, which is $6 million better than expected but still down from $261 million in the year-earlier quarter. A quarterly loss of three cents was a penny better than analysts projected.
User numbers aren't pretty and continue to decline across the board. Daily active users were down 12 percent from the third quarter, while monthly active users declined 16 percent. One piece of good news: Gamers who stuck around are paying more. Average daily bookings, or payments, per average daily active user rose 10 percent between the third and fourth quarters.
Zynga said it is buying NaturalMotion, a mobile game and technology company in the U.K., for $527 million in cash and stock.
In a phone interview, Mattrick said that NaturalMotion's combination of hit mobile games "CSR Racing" and "Clumsy Ninja," and of technology will "accelerate Zynga's move to mobile and the growth of the company."
The coming year will be marked by a transition to mobile, Mattrick said. Seventy-five percent of all new projects will be mobile first, more than half of its revenue will come from mobile at some point this year and the game FarmVille will move to mobile devices in the second quarter.
Shares in Zynga were halted briefly after its announcement and then rose more tha 20 percent in after-hours trading.
By CNBC's Julia Boorstin. Follow her on Twitter: @JBoorstin.
—Reuters contributed to this report.