Zynga Inc Earnings: What To Expect?

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Zynga Inc Earnings: What To Expect?

Zynga Inc (NASDAQ:ZNGA) will post second-quarter 2014 results after the market close on Thursday, August 7. Wedbush analyst Michael Pachter, in a report dated August 4, 2014 expect the bookings to come in at $195 million and Earnings per share at $0.01 compared to the consensus of $191 million and $0.00, and guidance of $175—$195 million and EPS in the range of $0.00—$0.01.

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Zynga need to come with new titles

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In the second-quarter, the social gaming company is expected to post increased booking on a sequential basis from $161 million in the first-quarter on the back of mobile shift and launch of New Zynga Poker and Farmville 2.

Zynga titles failed to make a place in the top 5 spots of the AppAnnie grossing chart on a sustained basis, which implies annualized bookings of $200 million or more, believe analyst. Pachter is expecting that the company would release another title towards the end of the quarter, and other bookings will rise year over year gaining from NaturalMotion licensing. Analyst expects Zynga could come up with one title in the third-quarter, and the next one in the fourth-quarter to attain the financial year guidance.

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Mobile bookings to be tested

For the full year, management has given a booking guidance of $770—$810 and Earnings per share of $0.01—0.03, which the analyst expect to remain unaltered. According to Pachter, “Results should be backend-loaded with the introduction of IP in new categories later in the year disclosed on the last results call yet to materialize.” Until now, Zynga has mainly focused on mobile reboots compared to the new IPs.

For the third-quarter booking guidance of $200 million is suggested, which means that if second-quarter bookings come somewhere between the given guidance range, then fourth-quarter guidance will be in the range of $224–$264 million. To attain the range, Zynga should launch one or two high profile games before fiscal 2014 ends.

Zynga is estimating that mobile booking will contribute more than half to the total bookings, so total mobile bookings are expected to come in around $400 million. In the first-quarter mobile bookings came in at $58 million, which indicates that Zynga will have to increase this number by $25—$30 million each quarter.

Wedbush analyst has reiterated Outperform rating to Zynga with a 12-month price target of $7.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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