Zynga Tanks on Weak Q4 Earnings, Low Bookings Guidance

Zynga Inc. (ZNGA) just released its fourth quarter fiscal 2016 earnings results, posting earnings of a loss of four cents per share and GAAP revenues of $190.5 million. Currently, ZNGA is a #4 (Sell) on the Zacks Rank, and is down 4.76% to $2.40 per share in trading shortly after its earnings report was released.

Missed earnings estimates. The company reported earnings of a loss of four cents per share, missing the Zacks Consensus Estimate of a loss of three cents per share.

Missed revenue estimates. The company saw GAAP revenue figures of $190.5 million, lagging behind our consensus estimate of $194 million and increasing 3% year-over-year. Deferred revenue increased by $11 million, which was $6 million above Zynga’s guidance.

Zynga reported bookings of $201.5 million, which came in above the high end of the guidance range and increased 11% year-over-year.

Mobile revenue of $154.7 million, or 81% of overall revenues, grew 20% year-over-year, while mobile bookings of $167.1 million, 83% of overall bookings, increased 25% year-over-year.

Looking ahead to the first quarter of 2017, GAAP revenue is projected to be $185 million, with a net loss of ($16) million. Bookings are expected to come in at $190 million.

"We had a strong Q4 and made significant progress this year in our turnaround and we're encouraged by the fundamentals of our business as we head into 2017. We're pleased with the performance of our live services and the quality of our new releases as we improved profitability and continued to sharpen our operating model," said Frank Gibeau, CEO of Zynga.

Here’s a graph that looks at Zynga’s price, consensus, and EPS surprise:

Zynga Inc. Price, Consensus and EPS Surprise

Zynga Inc. Price, Consensus and EPS Surprise | Zynga Inc. Quote

Zynga Inc. is the world's largest social game developer with users playing their games which include CityVille, FarmVille, FrontierVille, Words With Friends, Mafia Wars, Zynga Poker, Cafe World, and Treasure Isle. They operate their games as live services, by which they mean that they continue to support and update games after launch and gather daily, metrics-based player feedback that enable them to continually enhance their games by adding new content and features. All of their games are free to play, and they generate revenue through the in-game sale of virtual goods and advertising.

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