Zynga Inc Expected To Post A Bigger Loss In 3Q

Zynga Inc (NASDAQ:ZNGA) will post its third-quarter earnings on Thursday after the close, and it is expected to post a wider loss compared to a year ago. On average, analysts expect the game maker to post a loss of five cents per share, a drop from a loss of 3 cents per share in the previous year.

Revenue for Zynga may rise sequentially

The consensus estimate has dropped over the past three months when analysts estimated the firm would post a loss of three cents, but has been stable over the past month. Analysts are expecting a loss of 15 cents per share for the fiscal year, and a revenue decline of 15% year over year to $171.7 million for the quarter, compared to $202.6 million a year ago. For the full year, revenue is expected to come in at $709.3 million.

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

The analysts at Trefis expect the company to post sequential growth in revenue in the third-quarter, driven by success on the mobile platform. Zynga Inc’s overall mobile booking contributions may increase beyond 50% in the third-quarter. The profitability of the company could drop during the third quarter due to the substantial increase in marketing and R&D expenses. The Trefis analysts, however, expect that in the long-run the company will need to perform even better than it has with its recent partnership with leading brands. In order to rebuild confidence among investors, the game maker also needs more exciting and unique content.

Will the firm’s mobile efforts pay in Q3?

Zynga Inc (NASDAQ:ZNGA) is investing significantly to ramp up its mobile platform. In the second-quarter mobile bookings contributed 50% as compared to 36% in the first-quarter of 2014. Moreover, the company has unveiled several mobile versions for its existing games during the year. Some of the new titles include New Words With Friends, Zynga Poker and NFL Showdown, which were rolled over on the iPhone, iPad and Google Play. In the second-quarter, the company launched FarmVille 2: Country Escape and Hit it Rich! Slots.

With newer versions of the already successful franchises, the company enjoyed sequential improvement in earnings during the second-quarter. It also improved monetization (average booking per user) from 6.3 cents in the first-quarter to 6.7 cents in the second-quarter of 2014. Monthly active users surged from 123 million in the first-quarter to 130 million in the second-quarter, with sequential improvement in both daily active users and monthly unique users as well.