Zynga ZNGA reported a loss in the first quarter of 2020 of 11 cents per share. The figure was narrower than a loss of 14 cents in the year-ago period. Revenues jumped 52.1% year-on-year to $ 403.8 million, driven by the strength of real-time services and the strong growth of international markets. In particular, Merge Dragons!, Empires E puzzles and contributions from Merge Magic! and Game of Thrones Slots Casino led top growth in the reported quarter. The Zacks consensus estimate for earnings and revenue was set at 5 cents per share and $ 406 million respectively. Total bookings were $ 425 million, up 18.1% over the previous year driven by strong mobile bookings. The consensus score for reservations has been set at $ 406 million.
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Quarter Details Zynga's online gaming revenue (85.3% of total revenue) increased 72% year-over-year to $ 344.4 million thanks to its five popular series: CSR Racing, Words With Friends, Zynga Poker, Empires & Puzzles and Merge Dragons! and strong player involvement in all titles as a result of self-quarantine-induced coronavirus by users around the world. In particular, the Empires & Puzzles and Social Slot portfolio saw record revenues and reservations in the quarter reported. Advertising revenue (14.7% of total revenue) and advertising reservations (13.9% of total reservations) decreased 8.9% and 8.7%, year on year to $ 59 respectively , $ 4 million and $ 59.2 million attributed to the reduction in advertising demand following the blockade of the coronavirus. Mobile revenue (95.8% of total revenue) and mobile bookings increased 57.3% and 19.7% year-over-year to $ 387 million and $ 405.5 million respectively. The increase was driven by solid live service performance. CSR2 contributed decisively in the first quarter with the successful launch of Elite Customs, a new feature that allows players to customize and update their car collections using new liveries, interiors, wheel updates and more – and a second Legends package. Geographically, revenues from the United States (60.1% of total revenues) increased 41.3% year-on-year to $ 243 million. In addition, international revenues (39.9% of total revenues) increased 73.1% to $ 161 million. The company benefited from the self-publishing of Empires & Puzzles in South Korea, Japan and Taiwan in the first quarter. Basic User Details In the first quarter, user revenue was $ 344 million, up 72% year-on-year and user payment reservations were $ 366 million, up 24% yoy.However, Zynga's average mobile daily active users (DAUs) decreased 7 percent yoy to 21 million. The addition of Empires & Puzzles and Merge Magic! it was more than offset by the reduction in old mobile titles like Zynga Poker and chat games. In addition, mobile average monthly active users (MAUs) decreased 5% year-on-year to 68 million in the reported quarter, mainly due to the decline in Zynga Poker, chat games and old mobile titles, partially offset by the additions of Empires & Puzzles, Merge Magic! and Merge Dragons! On a sequential basis, both mobile DAUs and mobile MAUs increased modestly, driven by the growth of the company's casual card portfolio and Words With Friends. Mobile daily bookings for Average Mobile SAD (ABPU) grew 27% year-over-year to $ 0.216 in the quarter. Operating details The GAAP gross margin as a percentage of revenues increased to 64% from 54% in the quarter of last year due to a lower net increase in deferred revenues. Non-GAAP operating expenses (51.6% of total revenues) increased 13.6% year-on-year to $ 208.4 million in the quarter mainly reported due to the increase in sales and market investments. Non-GAAP research and development (R&D), general and administrative (G&A) and sales and marketing (S&M) expenses increased 3.8%, 8.6% and 21% year on year, respectively, to $ 67.1 millions, $ 21.2 million and $ 120.1 million. Adjusted EBITDA was $ 68.5 million versus a negative $ 18.1 million in the prior year quarter. Balance sheet As of March 31, 2020, Zynga had cash and cash equivalents and short-term investments of approximately $ 1.26 billion compared to $ 1.36 billion as of December 31, 2019. The cash flow used in operating activities in the first quarter 2020 was $ 35.1 million compared to $ 94 million in cash flow from operating activities in the fourth quarter of 2019. Free cash flow was negative by $ 43.7 million in the first quarter compared to $ 89.2 million in the previous quarter. Warranty For the second quarter of 2020, Zynga expects revenues of $ 400 million and bookings of $ 460 million. services with sequential growth expected between its five franchises forever and the year-on-year additions of Merge Magic! and Game of Thrones Slots Casino. Operating expenses are expected to increase sequentially. Adjusted EBITTA is expected to be $ 32 million. The net loss is expected to be $ 60 million. For 2020, management expects $ 1.65 billion in revenues and $ 1.8 billion in bookings. Zacks position and actions to consider Currently, Zynga holds a Zacks position no. 3 (Hold). Electronic Arts EA, Activision Blizzard ATVI and Netflix Inc. NFLX are some of the best classified titles in the wider consumer and discretionary sector. Electronic Arts has a level 1 Zacks (strong purchase) while Activision Blizzard and Netflix have a level 2 Zacks (purchase). You can see the complete list of Zacks n. 1 today. 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