Groupon Inc, Zynga Inc Q4 Earnings Preview


Analysts expect Groupon to report 3 cents a share in earnings, down from 4 cents in Q4, 2013

Groupon and Zynga both are scheduled to release their fourth-quarter results on Thursday, February 12 after the closing bell. Groupon shares are up 1.58% while Zynga shares have declined 2.49% in early trading Thursday. Both stocks have been out of favor with the Wall Street for quite some time. Ahead of the official results, let’s take a look at what analysts expect from each of them.

Groupon: analysts see some positive trends

Groupon shares have declined more than 30% in the past 12 months amid concerns over revenue growth. The daily deals company has guided Q4 revenue between $875 million and $925 million. Analysts polled by Thomson Reuters expect Groupon to report 3 cents a share in earnings, down from 4 cents in the corresponding quarter a year ago.

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Revenue for the quarter is expected to increase 18.20% to $908.38 million. Sterne Agee analyst Arvind Bhatia said in a research note last week that Groupon is showing potential upside in several areas. Sterne Agee’s Q4 checks suggest that trends, including the North America Local segment, accelerated QoQ. Bhatia believes Groupon is highly likely to sell part of its Ticket Monster operations.

Sterne Agee expects Groupon to report $2.1 billion in Q4 billings, $900 million in revenue and $90 million in adjusted EBITDA.

Zynga: revenue expected to rise 37.10%

The social gaming company disappointed investors in the third quarter with 13% drop in revenue and 16% decline in the number of monthly active users. However, the recent success of Words with Friends game is likely to drive growth for Zynga. Analysts expect the company’s Q4 revenue to jump 37.10% to $201.11 million. The company likely faced profitability pressure in the December quarter due to heavy investments in marketing and R&D as it looked for the next big hit.

At the fourth-quarter earnings call, investors and analysts will be looking closely at the company’s margins. Going forward, Zynga is expected to benefit from the strong mobile market.