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Zynga (ZYNGA) Q4 Earnings to Gain on Strong Mobile Portfolio
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Zynga is set to report fourth-quarter 2017 results on Feb 7. The company’s earnings have lagged the Zack Consensus Estimate in two of the trailing four quarters, with an average negative surprise of 100%.
Last quarter, the company reported earnings of 2 cents per share, which were in line with the consensus estimate. Revenues increased 23% year over year to $224.6 million and beat the Zacks Consensus Estimate of $210 million.
For fourth-quarter 2017, total revenues and bookings are expected at $215 million and $210 million, respectively. Moreover, adjusted EBITDA is projected at $35 million.
Let’s see how things are shaping up for this announcement.
Zynga benefits from the surge in mobile gaming audience. In the third quarter, mobile revenues were 87% of total revenues compared with 80% in the year-ago quarter. Additionally, mobile revenues jumped 33% from the year-ago quarter.
The company’s increasing payer conversion rate driven by games like CSR Racing 2 (CSR2) and Zynga Poker is a key catalyst. Notably, payer conversion was 2.4% in third-quarter 2017 compared with 2.3% reported in the year-ago quarter.
During the quarter, Zynga launched AR Mode (augmented reality integration) for CSR2, designed with Apple’s (AAPL - Free Report) ARKit and exclusively available for iPhone and iPad with iOS 11. The company also launched Words With Friends 2.
Zynga’s continuing investments on new emerging gaming platforms like chat and AR is positive. Management believes that Facebook Instant Games and Apple's iMessage present significant growth opportunity.
Moreover, the company’s cost-cutting initiatives are helping it improve operational efficiency. Non-GAAP operating expenses declined 4% to $121.3 million in the last quarter.
Zynga also acquired mobile card game studio of Peak Games. The deal strengthened the company’s casual card game portfolio with the addition of popular mobile card games such as Spades Plus and Gin Rummy Plus.
However, Zynga expects advertising to deteriorate slightly due to web declines and softer pricing in the mobile gaming advertising market. Moreover, intense competition from the likes of Glu Mobile, EA and Nintendo is a concern.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zynga has a Zacks Rank #3 and an Earnings ESP of +31.25%. Therefore, our proven model shows that the company is likely to deliver a positive surprise this quarter.
Stocks That Warrant a Look
Here are a couple of stocks that you may want to consider as our model shows that they have the right combination of elements to deliver an earnings beat in their upcoming release.
Activision Blizzard has an Earnings ESP of +4.99% and a Zacks Rank #3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Zynga (ZYNGA) Q4 Earnings to Gain on Strong Mobile Portfolio
Zynga is set to report fourth-quarter 2017 results on Feb 7. The company’s earnings have lagged the Zack Consensus Estimate in two of the trailing four quarters, with an average negative surprise of 100%.
Last quarter, the company reported earnings of 2 cents per share, which were in line with the consensus estimate. Revenues increased 23% year over year to $224.6 million and beat the Zacks Consensus Estimate of $210 million.
For fourth-quarter 2017, total revenues and bookings are expected at $215 million and $210 million, respectively. Moreover, adjusted EBITDA is projected at $35 million.
Let’s see how things are shaping up for this announcement.
Zynga Inc. Price and EPS Surprise
Zynga Inc. Price and EPS Surprise | Zynga Inc. Quote
Key Factors
Zynga benefits from the surge in mobile gaming audience. In the third quarter, mobile revenues were 87% of total revenues compared with 80% in the year-ago quarter. Additionally, mobile revenues jumped 33% from the year-ago quarter.
The company’s increasing payer conversion rate driven by games like CSR Racing 2 (CSR2) and Zynga Poker is a key catalyst. Notably, payer conversion was 2.4% in third-quarter 2017 compared with 2.3% reported in the year-ago quarter.
During the quarter, Zynga launched AR Mode (augmented reality integration) for CSR2, designed with Apple’s (AAPL - Free Report) ARKit and exclusively available for iPhone and iPad with iOS 11. The company also launched Words With Friends 2.
Zynga’s continuing investments on new emerging gaming platforms like chat and AR is positive. Management believes that Facebook Instant Games and Apple's iMessage present significant growth opportunity.
Moreover, the company’s cost-cutting initiatives are helping it improve operational efficiency. Non-GAAP operating expenses declined 4% to $121.3 million in the last quarter.
Zynga also acquired mobile card game studio of Peak Games. The deal strengthened the company’s casual card game portfolio with the addition of popular mobile card games such as Spades Plus and Gin Rummy Plus.
However, Zynga expects advertising to deteriorate slightly due to web declines and softer pricing in the mobile gaming advertising market. Moreover, intense competition from the likes of Glu Mobile, EA and Nintendo is a concern.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zynga has a Zacks Rank #3 and an Earnings ESP of +31.25%. Therefore, our proven model shows that the company is likely to deliver a positive surprise this quarter.
Stocks That Warrant a Look
Here are a couple of stocks that you may want to consider as our model shows that they have the right combination of elements to deliver an earnings beat in their upcoming release.
NVIDIA (NVDA - Free Report) has an Earnings ESP of +6.87% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Activision Blizzard has an Earnings ESP of +4.99% and a Zacks Rank #3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>