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Zynga (ZNGA) to Report Q4 Earnings: What's in the Cards?

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Zynga (ZNGA - Free Report) is set to report fourth-quarter 2020 results on Feb 10.

The company expects fourth-quarter revenues to be $570 million, up 41% year over year.

The Zacks Consensus Estimate for revenues is pegged at $676.6 million, indicating an increase of 56.1% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings has remained unrevised at 9 cents per share over the past 30 days, suggesting year-over-year growth of 125%.

Notably, the company’s earnings missed the Zacks Consensus Estimate in the trailing four quarters, the average negative surprise being 89.8%.

Let’s see how things have shaped up for the upcoming announcement.

 

Zynga Inc. Price and EPS Surprise Zynga Inc. Price and EPS Surprise

Zynga Inc. price-eps-surprise | Zynga Inc. Quote

Factors Likely to Influence Q4 Results

Zynga is expected to have benefited from strength in mobile live services supported by strong popularity of five franchises — CSR Racing, Words With Friends, Zynga Poker, Empires & Puzzles, and Merge Dragons!

Also, addition of Peak’s Toon Blast and Toy Blast is expected to have expanded its forever franchise portfolio and driven player engagement, thereby contributing to top-line growth.

Moreover, the coronavirus-led social-distancing practices, which have confined people to their homes, are expected to have been a major growth driver in increasing the number of active users in the to-be-reported quarter.

Further, contributions from Rollic’s hyper-casual games portfolio is likely to have aided the expansion of the company’s robust gaming portfolio and strengthened its international audience base.

Additionally, rollout of Harry Potter: Puzzles & Spells at the end of third-quarter 2020 is likely to have driven player growth in the quarter under review.

Apart from this, the company launched the new Elite Tuners feature and Design A Wrap competition in CSR Racing 2 (CSR2), in partnership with Japanese automotive tuner, Liberty Walk. Notably, CSR2 is expected to have gained popularity from key partnerships and continued featuring content from automotive brands.

Moreover, the increasing popularity of games like Merge Magic!, Farm Ville 3, Puzzle Combat, Empires & Puzzles and CSR2 is expected to have benefited Zynga’s net bookings and  driven monetization of the company’s gaming portfolio.

Notably, Zynga expects net bookings to be $670 million, indicating 55% year-over-year growth from the figure reported in the year-ago quarter. The Zacks Consensus Estimate for bookings is currently pegged at $675.5 million, indicating growth of 55.9% year over year.

Moreover, strength in Zynga’s Social Slots portfolio due to games such as Wizard of Oz Slots, Hit It Rich! Slots and Game of Thrones Social Slots Casino, along with contributions from the Casual Cards portfolio is expected to have positively impacted the top line.

For the to-be-reported quarter, the consensus mark for daily average users and monthly average users is pegged at 33.1 million and 96.8 million, respectively, indicating an increase of 65.5% and 46.7% year over year.

However, declines in older mobile and web game users is expected to have been a dampener in the quarter under review.

Moreover, intensifying competition in the video game space from the likes of Electronic Arts, Take-Two Interactive and Activision Blizzard is likely to have had a negative impact on fourth-quarter revenues.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Zynga has a Zacks Rank #4 (Sell) currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are few companies which, per our model, have the right combination of elements to post earnings beat in their upcoming releases.

Callaway Golf Company (ELY - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

Fox Corporation (FOXA - Free Report) has an Earnings ESP of +145.46% and a Zacks Rank #2.

Yeti Holdings (YETI - Free Report) has an Earnings ESP of +6.91% and a Zacks Rank #2.

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