) reported second-quarter loss (including stock-based
compensation expenses) of 4 cents per share, significantly
narrower than the Zacks Consensus Estimate of a loss of 7
On a non-GAAP basis, the company reported a loss of 1 cent
compared to year-ago quarter's earnings of 1 cent per share.
Zynga's bookings decreased 37.8% from the year-ago quarter to
$187.6 million but comfortably beat the Zacks Consensus Estimate
of $184.0 million. Zynga's total revenue came in at $230.7
million, down 30.6% from the year-ago quarter.
Advertising revenues (12.0% of total revenue) were down 33.1%
from the year-ago quarter to $27.4 million.
Online game revenues, which comprised 88.0% of the total
revenue, plummeted 30.3% year over year to $203.3 million. During
the quarter, Zynga acquired Spooky Cool Labs.
Zynga's mobile bookings were down 12.0% from the year-ago
quarter primarily due to the tepid performance of the new mobile
games. On a quarter-over-quarter basis, mobile bookings were up
) related bookings comprised 68.0% of total bookings, down from
76% in the previous quarter.
Daily Active Users (DAU) were down 45.0% year over year and
24% sequentially to 39 million. Monthly Active Users (MAU) also
declined 39.0% year over year and 26.0% quarter over quarter to
During the quarter, Zynga launched six new games (five mobile
games and one for web-based platform) among which two mobile
) "Editor's Choice" award.
The company undertook several cost-cutting initiatives, which
included spending cuts in technology outside services, labor
costs and marketing. These resulted in a 29.0% decrease in costs
to $261.1 million. Sequentially, costs were down a modest
Adjusted EBITDA was $8.3 million in the quarter, down from
$65.3 million reported in the year-ago quarter. Zynga reported
non-GAAP net loss of $6.1 million in the quarter compared to net
income of $4.6 million a year ago. However, including stock-based
compensation of $25.9 million and its related tax impacts, net
loss came in at $31.5 million.
At the end of the second quarter, Zynga had cash and cash
equivalents (including marketable securities) of $1.12 billion
compared with $1.27 billion in the previous quarter. Zynga used
$645k cash for operating activities.
For the third quarter of 2013, Zynga expects non-GAAP loss per
share in the range of 9 cents to 5 cents. The company expects to
generate revenues between $175 million and $200 million.
Bookings for the third quarter are projected in the range of
$125 million-$150 million, down sequentially, primarily due to
sluggish growth expectations for the new mobile games and waning
popularity of its older games.
Moreover, Zynga expects adjusted EBITDA in the range of ($30)
million to breakeven in the third quarter. For fiscal 2013, Zynga
expects adjusted EBITDA margin to be between 0% and 5% (down from
previous estimate of 0.0%-10.0%). Capital expenditure is expected
to be $25 million in 2013 (down from the previous estimate of
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
Zynga's initiatives to expand in the real money casino and
poker games across different platforms should act in its favor.
However, we consider the competition from
International Game Technology
) to be a possible headwind.
Moreover, shareholder-friendly initiatives such as share
buyback and cost reduction programs will drive the stock in the
However, we also note that barriers to entry are low in the
social gaming market and this will attract new entrants, thereby
increasing competition for Zynga over the long term.
Currently, Zynga has a Zacks Rank #1 (Strong Buy).
APPLE INC (AAPL): Free Stock Analysis Report
FACEBOOK INC-A (FB): Free Stock Analysis
INTL GAME TECH (IGT): Free Stock Analysis
ZYNGA INC (ZNGA): Free Stock Analysis Report
To read this article on Zacks.com click here.