Yahoo Finance Zynga (ZNGA) to Report Q1 Earnings: What's in the Cards?
Zynga ZNGA is set to report first-quarter 2018 results on May 2.
The company’s earnings have lagged the Zack Consensus Estimate in one of the trailing four quarters, recording an average negative surprise of 25%.
In the last reported quarter, the company reported earnings of 2 cents per share, which were in line with the consensus estimate.
Revenues increased 22.4% year over year to $233.3 million. The top-line performance was strongest since first-quarter 2013, primarily driven by the successful launch of Words With Friends 2, growing live services and robust performance from CSR Racing 2 (CSR2) and Zynga Poker.
Zynga Inc. Price and EPS Surprise
Zynga Inc. Price and EPS Surprise | Zynga Inc. Quote
For first-quarter 2018, total revenues and bookings are expected at $200 million and $210 million, respectively. Moreover, adjusted EBITDA is projected at $20 million, while net loss is anticipated to be $5 million.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Zynga benefits from the surge in mobile gaming audience. In the fourth quarter, mobile revenues surged 32% year over year to $203.6 million. Mobile Daily Active (DAU) base increased 24% year over year to 20 million, driven primarily by Solitaire and Zynga Poker.
The company’s increasing payer conversion rate driven by games like CSR2 and Zynga Poker is a key catalyst. Further, Zynga anticipates advertising revenues to grow year over year.
The company’s continuing investments on new emerging gaming platforms like chat and AR is positive. Moreover, the acquisition of Peak Games strengthened the company’s casual card game portfolio with the addition of popular mobile card games such as Spades Plus and Gin Rummy Plus.
Moreover, operating expenses are projected to increase year over year, primarily driven by higher marketing spend on the company’s live services and higher G&A expenses, offset by R&D cost. This is expected to hurt margins in the soon-to-be-reported quarter.
What Does the Zacks Model Unveil?
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zynga has a Zacks Rank #3 and an Earnings ESP is 0.00%. Consequently, our proven model does not conclusively show that the company is likely to deliver a positive surprise this quarter.
Stocks That Warrant a Look
Here are stocks that you may want to consider as our model shows that they have the right combination of elements to deliver an earnings beat in their upcoming release.
Microchip MCHP has an Earnings ESP of +0.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arrow Electronics ARW has an Earnings ESP of +0.66% and a Zacks Rank #2.
CyberArk Software CYBR has an Earnings ESP of +3.53% and a Zacks Rank #3.
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Zynga Inc. (ZNGA) : Free Stock Analysis Report
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