Lower-Than-Expected Loss at Zynga - Analyst Blog
2013年4月26日 - 1:40AM
Zacks
Zynga Inc. (ZNGA)
reported first quarter loss per share (including stock-based
compensation expenses) of 3 cents, which was narrower than the
Zacks Consensus Estimate of a loss of 7 cents.
On a non-GAAP basis, the company
earned 1 cent compared with 6 cents per share in the year-ago
quarter.
Quarter
Details
Zynga’s non-GAAP bookings,
including deferred revenue of ($33.8) million, was down 30.2% from
the previous-year quarter to $229.8 million but comfortably beat
the Zacks Consensus Estimate of $221.0 million. Zynga’s total
revenue came in at $263.6 million, down 17.9% from the year-ago
quarter.
Advertising revenues (13.0% of
total revenue) jumped 20.7% year over year to $34.0 million.
Companies such as Honda (HMC) and NBC Universal
renewed their advertising deals with the social game maker.
Online game revenues plummeted
21.6% year over year to $229.6 million. During the quarter, Zynga
launched its real money game in the UK in partnership with
bwin.party.
The company’s mobile games
performed exceedingly well as mobile bookings grew from 21% from
the previous year. Facebook (FB) related bookings
comprised 76% of total bookings.
Daily Active Users (“DAU”) were
down 21% year over year and 8% sequentially to 52 million. Monthly
Active Users (“MAU”) also declined 13% year over year and 15%
quarter over quarter to 253 million.
During the quarter, Zynga launched
2 new games (1 each for mobile and web-based platform).
The company undertook several
cost-cutting initiatives, which included spending cuts in
technology outside services, labor costs, and marketing. These
resulted in a 34.0% decrease in costs to $268.5 million.
Adjusted EBITDA was $28.7 million
in the quarter, down from $86.8 million reported in the year-ago
quarter. Zynga reported non-GAAP profit of $9.1 million in the
quarter compared with net income of $47.0 million a year ago.
However, including stock-based compensation of $29.9 million, net
loss came in at $20.6 million.
At the end of first quarter, Zynga
had cash and cash equivalents (including marketable securities) of
$1.27 billion compared with $1.28 billion in the previous quarter.
Zynga generated cash flow from operating activities of $26.4
million versus $19.8 million in the previous quarter. Free cash
flow was $23.0 million.
Outlook
For the second quarter of 2013,
Zynga expects non-GAAP loss per share in the range of 4 cents to 3
cents per share. The company expects to generate revenues between
$225 million and $235 million. Bookings for the second quarter are
projected in the range of $180 million-$190 million.
Moreover, Zynga expects adjusted
EBITDA to be in the range of ($10) million to break even in the
second quarter. For fiscal 2013, Zynga expects adjusted EBITDA
margin to be between 0% and 10%. Capital expenditure is expected to
be $35 million in 2013.
The company expects second quarter
bookings to decline due to lower-than-expected demand for the web
based games.
Recommendation
We believe that Zynga is well
positioned to grow in the near term based on its innovative product
pipeline and its dominant position in the social and mobile gaming
sector. The company’s expansion in the advertising space is another
positive for the company. Zynga’s initiatives to expand in the real
money casino and poker games across different platforms should act
in its favor. However, we believe that competition from
International Game Technology (IGT ) could be a possible headwind.
Moreover, shareholder-friendly
initiatives such as share buyback and cost reduction program will
drive the stock in the near term.
However, we also note that barriers
to entry are low in the social gaming market and this will attract
new entrants, thereby further increasing competition for Zynga over
the long term.
Currently, Zynga has a Zacks Rank
#3 (Hold).
FACEBOOK INC-A (FB): Free Stock Analysis Report
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INTL GAME TECH (IGT): Free Stock Analysis Report
ZYNGA INC (ZNGA): Free Stock Analysis Report
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