Zynga ( ZNGA ) is seeing steady growth in its forever franchises, and this trend will likely continue in the near term, and aid the company's earnings growth. The company's Q2 revenues announced last week topped street estimates. We expect the company to see low double digit revenue growth for the full year, partly due to the impact of acquisitions - Casual Cards, and Gram Games. We have created an interactive dashboard ~ What Is The Outlook For Zynga ~ on the company's expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company's overall revenues, earnings, and price estimate.
Expect Online Games To See Low Double Digit Revenue Growth
We forecast Zynga's Online Games revenues to grow in low double digits to around $750 million in 2018. The company's forever franchises, such as Zynga Poker, and CSR 2, continue to do well, and account for around half of the company's overall revenues. Zynga's collaborations with automakers is aiding the demand for the CSR franchise. For instance, it launched BMW M2 competition ahead of the car's actual debut in market, and it plans to crate events around Porsche in the coming months. While the company is also launching several new games, the company's management in the recent earnings conference call stated that it expects to see their contribution to be significant from 2019 onward. However, the company's acquisitions of Casual Cards and Gram Games will aid the overall top line growth. Gram Games' popular titles include Merge Dragons and 1010 , and are expected to boost Zynga's active user base. In fact, the company expects Merge Dragons to see strong future growth and become a forever franchise.
Zynga is seeing growth primarily on the mobile platform, and the same now accounts for around 90% of the company's overall revenues. While mobile offers a significant growth opportunity, Zynga competes with large players, such as Activision Blizzard's King Digital, and Electronic Arts. Also, small players are making inroads, as the cost of developing games is low. It will be interesting to see how Zynga's new games trend amid competition from other players. New games, growth in forever franchises, and the impact of acquisitions will also aid the company's advertising revenues growth. Advertising revenues were up 15% in H1 2018, and it will likely see double digit growth for the full year, as well.
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