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Zynga’s online game or user pay revenues (81.5% of total revenues) surged 51.2% year over year to $587 million.
In addition, Advertising revenues (18.5% of total revenues) increased 109.4% year over year to $63.5 million. Advertisement bookings (18.7% of total bookings) climbed 111.1% year over year to $63 million.
Mobile revenues (97.1% of total revenues) and mobile bookings increased 61.6% and 38.7% year over year to $699.2 million and $691.2 million, respectively. These increases were driven by robust live services performance.
Live services delivered better-than-anticipated performances from Rollic’s hyper-casual portfolio, Words With Friends and Zynga Poker.
Words With Friends delivered its best second-quarter revenue and bookings in the franchise’s 12-year history, driven by the recent introduction of Rewards Pass and new Solo Challenge content.
Rollic’s portfolio now includes 15 games that have reached the #1 or #2 top free downloaded games positions in the U.S. App Store as well as three hit titles – Hair Challenge, High Heels! and Tangle Master 3D – that have each generated over 100 million downloads worldwide.
On a geographic basis, revenues from the United States (60.6% of total revenues) rallied 58% year over year to $436 million.
Also, International revenues (39.4% of total revenues) surged 61.4% to $284 million on impressive growth in Asia.
User Base Details
In the second quarter, user pay bookings were $579 million, up 27% year over year.
Zynga’s average mobile daily active users (DAUs) surged 87% year over year to 41 million. Further, average mobile monthly active users (MAUs) soared 194% year over year to 205 million in the reported quarter.
Solid uptick in user count was primarily driven by contributions from Toon Blast, Toy Blast and Rollic’s hyper-casual game portfolio.
Average mobile daily bookings per average mobile DAU (ABPU) declined 26% year over year to $0.183.
Operating Details
GAAP gross margin, as a percentage of revenues, increased to 65% from the year-ago quarter’s 60% on higher net increase in deferred revenues.
Non-GAAP operating expenses (48.6% of total revenues) rose 57.7% year over year to $350 million in the reported quarter, primarily on higher marketing investments.
Non-GAAP research & development (R&D), general & administrative (G&A) and sales & marketing (S&M) expenses shot up 26.9%, 4% and 82.4%, year over year, to $85 million, $26 million and $239 million, respectively.
Adjusted EBITDA came in at $173.7 million compared with the year-earlier quarter’s $70 million.
Balance Sheet
As of Jun 30, 2021, Zynga had cash, cash equivalents & short-term investments of $1.50 billion compared with $1.36 billion as of Mar 31, 2021.
Cash flow used by operating activities in second-quarter 2021 was $161 million compared with the previous quarter’s $163.7 million and year-ago quarter’s $145.2 million. Free cash flow was $158.4 million in the second quarter compared with the previous quarter’s negative free cash flow of $165.4 million and year-ago quarter’s $142.2 million.
Guidance
For third-quarter 2021, Zynga expects revenues of $6665 million and bookings of $660 million, up 32% and 5% year over year, respectively. Adjusted EBITDA is projected at $150 million, while loss is expected to be 10 cents per share.
From an advertising perspective, given that the broader adoption of Apple’s privacy changes occurred toward the end of June, the company expects the short-term pressure on advertising revenues and bookings to be more prominent in the third quarter than in the second quarter.
For 2021, the company expects to deliver revenues of $2.725 billion, indicating growth of 38% year over year. Bookings are expected at $2.8 billion, indicating growth of 23% year over year.
Adjusted EBITDA is estimated at $575 million and loss is predicted to be 12 cents per share.
The company expects continued momentum in the live services portfolio along with contributions from game launches will be a major growth driver. Also, steady demand for Harry Potter: Puzzles & Spells as well as Rollic’s hyper-casual games is anticipated to boost player engagement for Zynga’s live services platform.
Per the company, declines in older mobile and web game users might partially offset revenue growth in 2021.
Image: Bigstock
Zynga (ZNGA) Swings to Earnings in Q2, Logs Revenue Growth
Zynga reported earnings of 2 cents per share in second-quarter 2021. The company had reported a loss of 16 cents in the year-ago quarter.
Revenues surged 59.3% year over year to $720 million on broad-based strength in live services.
The Zacks Consensus Estimate for earnings and revenues was pegged at 9 cents per share and $714 million, respectively.
Total bookings came in at $712 million, up 37.5% year on year on strong mobile bookings. The consensus mark for bookings was pegged at $712 million.
Zynga Inc. Price, Consensus and EPS Surprise
Zynga Inc. price-consensus-eps-surprise-chart | Zynga Inc. Quote
Quarter Details
Zynga’s online game or user pay revenues (81.5% of total revenues) surged 51.2% year over year to $587 million.
In addition, Advertising revenues (18.5% of total revenues) increased 109.4% year over year to $63.5 million. Advertisement bookings (18.7% of total bookings) climbed 111.1% year over year to $63 million.
Mobile revenues (97.1% of total revenues) and mobile bookings increased 61.6% and 38.7% year over year to $699.2 million and $691.2 million, respectively. These increases were driven by robust live services performance.
Live services delivered better-than-anticipated performances from Rollic’s hyper-casual portfolio, Words With Friends and Zynga Poker.
Words With Friends delivered its best second-quarter revenue and bookings in the franchise’s 12-year history, driven by the recent introduction of Rewards Pass and new Solo Challenge content.
Rollic’s portfolio now includes 15 games that have reached the #1 or #2 top free downloaded games positions in the U.S. App Store as well as three hit titles – Hair Challenge, High Heels! and Tangle Master 3D – that have each generated over 100 million downloads worldwide.
On a geographic basis, revenues from the United States (60.6% of total revenues) rallied 58% year over year to $436 million.
Also, International revenues (39.4% of total revenues) surged 61.4% to $284 million on impressive growth in Asia.
User Base Details
In the second quarter, user pay bookings were $579 million, up 27% year over year.
Zynga’s average mobile daily active users (DAUs) surged 87% year over year to 41 million. Further, average mobile monthly active users (MAUs) soared 194% year over year to 205 million in the reported quarter.
Solid uptick in user count was primarily driven by contributions from Toon Blast, Toy Blast and Rollic’s hyper-casual game portfolio.
Average mobile daily bookings per average mobile DAU (ABPU) declined 26% year over year to $0.183.
Operating Details
GAAP gross margin, as a percentage of revenues, increased to 65% from the year-ago quarter’s 60% on higher net increase in deferred revenues.
Non-GAAP operating expenses (48.6% of total revenues) rose 57.7% year over year to $350 million in the reported quarter, primarily on higher marketing investments.
Non-GAAP research & development (R&D), general & administrative (G&A) and sales & marketing (S&M) expenses shot up 26.9%, 4% and 82.4%, year over year, to $85 million, $26 million and $239 million, respectively.
Adjusted EBITDA came in at $173.7 million compared with the year-earlier quarter’s $70 million.
Balance Sheet
As of Jun 30, 2021, Zynga had cash, cash equivalents & short-term investments of $1.50 billion compared with $1.36 billion as of Mar 31, 2021.
Cash flow used by operating activities in second-quarter 2021 was $161 million compared with the previous quarter’s $163.7 million and year-ago quarter’s $145.2 million. Free cash flow was $158.4 million in the second quarter compared with the previous quarter’s negative free cash flow of $165.4 million and year-ago quarter’s $142.2 million.
Guidance
For third-quarter 2021, Zynga expects revenues of $6665 million and bookings of $660 million, up 32% and 5% year over year, respectively. Adjusted EBITDA is projected at $150 million, while loss is expected to be 10 cents per share.
From an advertising perspective, given that the broader adoption of Apple’s privacy changes occurred toward the end of June, the company expects the short-term pressure on advertising revenues and bookings to be more prominent in the third quarter than in the second quarter.
For 2021, the company expects to deliver revenues of $2.725 billion, indicating growth of 38% year over year. Bookings are expected at $2.8 billion, indicating growth of 23% year over year.
Adjusted EBITDA is estimated at $575 million and loss is predicted to be 12 cents per share.
The company expects continued momentum in the live services portfolio along with contributions from game launches will be a major growth driver. Also, steady demand for Harry Potter: Puzzles & Spells as well as Rollic’s hyper-casual games is anticipated to boost player engagement for Zynga’s live services platform.
Per the company, declines in older mobile and web game users might partially offset revenue growth in 2021.
Zacks Rank & Stocks to Consider
Currently, Zynga carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader consumer discretionary sector are WW International, Inc. (WW - Free Report) , CuriosityStream Inc. (CURI - Free Report) and NeoGames S.A. . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CuriosityStream and WW International are slated to report quarterly earnings on Aug 10, while NeoGames S.A. is scheduled to report on Aug 11.