Zynga Inc. (NASDAQ: ZNGA), the maker of popular social media game Farmville, has been on the revival path for quite some time, especially after new CEO Frank Gibeau took charge a few years ago. The company revised up its full-year guidance in each of the last three quarters, in a sign that the recovery is gaining steam.
When the mobile game maker reports fourth-quarter results on Wednesday after the closing bell, the market will be looking for earnings of $0.06 per share, which represents a 20% year-over-year increase. Revenues are seen growing 57% annually to $418.56 million.
The company’s popular franchises, mainly Poker, Words with Friends-2 and CSR Racing-2, continue to support revenue generation. The upcoming results should also reflect early contributions from the recently launched Merge Magic!. The upbeat outlook also reflects revenues from the new Live services, which allow users to purchases virtual goods featured in the games.
Another strong booking growth in on the cards this time, reflecting the high level of user engagement. That should offset the impact of an estimated weakness in monthly active users and daily active users. The other headwinds are the diminishing popularity of the company’s older franchises and online games, in addition to the continuing strain on margins due to high operating expenses.
Mobile Segment Shines
In the third quarter, Mobile services, Zynga’s core segment that accounts for about 90% of total sales, continued the strong performance, with a marked increase in bookings that drove up revenues by 48% to $345 million. However, the top-line missed the estimates. Since its recent launch, Game of Thrones Slots Casino became the fastest growing Slots title in the first full quarter.
Last week Electronic Arts (EA) reported double-digit increase in third-quarter earnings and revenues, with all the key business segments registering growth. Though the results fell short of expectations, the company issued guidance above the consensus estimates.
Zynga’s shares have stayed low for several years after retreating from its post-IPO peak long back. The trend changed for the better last year when the shares regained momentum and grew about 24%.
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