Zynga Inc (NASDAQ: ZNGA) is a leading developer of the world’s most popular social games that are played by more than 100 million monthly consumers. The Company has created evergreen franchises FarmVille, Zynga Poker, Words With Friends, Hit it Rich! Slots and CSR Racing.

 

Recent announcements:

• Words With Friends 2 Debuts Tile Styles, the Game’s First Ever Customizable Game-Board Feature:

On Sep. 27, 2018, the company announced the launch of Tile Styles, the first ever customizable game-board feature introduced to the forever franchise and #1 mobile word game, Words with Friends 2. Tile Styles allows players to personalize their game by swapping out the iconic yellow word tiles with a collection of vibrant solid colors and captivating patterns.

• Zynga Poker and the World Poker Tour® Take Their Partnership In-Game: On Sep. 10, 2018, the company announced that it would be taking its multi-year partnership deal with renowned poker tournament series, the World Poker Tour®, into the digital realm of Zynga Poker, the world’s largest free-to-play poker game. Beginning Sep 10^th, the players can now experience the authentic tournament style play that the World Poker Tour is known for in the competitive virtual world of Zynga Poker, marking the game’s largest ever in-game partnership with additional competitive modes in future quarters.
• Zynga Announces Multi-Year Agreement with Disney to Develop a New Free-To-Play Mobile Star Wars™ Game: On August 21, 2018, the company announced a multi-year licensing agreement with Disney to develop and publish a new mobile game, with the option for a second game, that brings to life the universe of Star Wars ™ for players around the world. As a part of the agreement, Zynga will also assume operation of the live service of Star Wars ™: Commander, a free-to-play real-time strategy game developed by Disney. The Star Wars licensing agreement aligns with Zynga’s strategic priorities to create new forever franchises and grow its live services. Financial Results:

Before these announcements, on August 1^st, the company released its financial results for the quarter ended June 30, 2018. The company had a strong first half of the year, delivering Q2 results ahead of its guidance, driven by strength in its mobile live services and continued improvement in the operating leverage. Zynga’ live services strategy of creating innovative, bold beats and feature enhancements that increase player engagement is paying off, as its forever franchises – Words With Friends, CSR2 and Zynga Poker – collectively delivered double-digit year-over-year mobile revenue and bookings growth.

_____________________________________________________________________

Our members have booked up to 800% with our recent (2018) NASDAQ and NYSE small cap alerts. We will be initiating coverage on another exciting small cap security this week this week (10/23/18) at 9:45 AM EST. View our recent picks, track record, long term biotech picks and sign up for our real time, low float and breakout mobile/text alerts here – https://tradersnewssource.com/traders-news-source-new-members/

_____________________________________________________________________

Q2 2018 performance overview:

Q3 Guidance:

• Revenue of $218 million
• A net increase in deferred revenue of $30 million
• Bookings of $248 million
• Net loss of $21 million
• Adjusted EBITDA of $16 million

The management is now strategizing to grow Zynga in four ways. First, by delivering growth in its live services; second, by building new games with the goal of creating forever franchises; third, by investing in new emerging mobile technologies; and forth, by exploring M&A opportunities that will enhance its growth potential. First, it’ll continue to focus on growing its live services through innovative, bold beats.

Upcoming events: The company will report its third quarter 2018 financial results on Wednesday, October 31, 2018. At this time, Zynga will post management’s Q3 2018 Quarterly Earnings Letter, which includes Zynga’s third quarter results and fourth quarter financial guidance.

 

Analysts believe ZNGA ended the first half of 2018 with a much stronger foundation for the future as it continues to make progress towards its improved margin goals by the end of 2018 and achieving margins more in line with its peers over the long term.

 

Analyst views and brokerage actions:

Per www.marketbeat.com, Their average twelve-month price target is $4.9278, suggesting that the stock has a possible upside of 23.19%. The high price target for ZNGA is $6.00, and the low-price target for ZNGA is $3.70. There are currently two sell ratings, and 7 buy ratings for the stock, resulting in a consensus rating of “Buy.”

 

Below are the excerpts of recent ratings by brokerage house:

About the Company: Since its founding in 2007, Zynga’s mission has been to connect the world through games. To date, more than 1 billion people have played Zynga’s games across web and mobile, including FarmVille, Zynga Poker, Words With Friends, Hit it Rich! Slots and CSR Racing. Zynga’s games are available on a number of global platforms including Apple iOS, Google Android, and Facebook.  The company is headquartered in San Francisco, Calif., and has additional offices in the U.S., Canada, U.K., Ireland, India, Turkey and Finland.

Financial results:

Its mobile live services drove Zynga’ strong performance in Q2, in particular, its forever franchises – Words With Friends, CSR2 and Zynga Poker. Zynga’ focus on creating innovative, bold beats and feature enhancements continued to drive deeper engagement with its players and contributed to double-digit year-over-year mobile revenue and bookings growth collectively across its forever franchises.

 

The company tuning to quality over quantity and, based on player feedback and soft launch results, it expects to launch new titles in some or all of these categories into 2019 and beyond.

Revenue: In Q2, revenue was $217.0 million, above the company’ guidance by $9.0 million and up $7.8 million or 4% year-over-year. Bookings were $233.9 million, beating the guidance by $5.9 million and up $24.7 million or 12% year-over-year. The company had a net loss of $0.9 million, $14.1 million better than management’ guidance and a decline of $6.0 million in net income year-over-year.

EBIDTA: Zynga’ Adjusted EBITDA was $26.7 million, above the company’ guidance by $7.7 million, and a decrease of $3.2 million year-over-year. The company generated operating cash flow of $41.1 million in the quarter, up 9% year-over-year.

 

Cash Flow & Balance Sheet:

ZNGA ended the quarter with cash and short-term investments of $210 million and $182 million respectively, down from $372 million and $308 million a year ago. This quarter Generated operating cash flow of $41.1 million, up 9% year-over-year.

 

 

Guidance for 2018:

Management commentary on the guidance:

• The company’ upcoming performance will be driven primarily by bold beat execution across its live services and a full quarter contribution from its acquisition of Gram Games.
• The management anticipates that its year-over-year growth will benefit from full quarter contributions from its Casual Cards and Gram Games acquisitions as well as strength across its forever franchises.
• The company continues to expect its sequential and year-over-year progression to be affected by declines in web and older mobile games.
• Similar to Q2, ZNGA’ expects a significant net increase in deferred revenue as it continues to defer the majority of user pay bookings from the recently acquired portfolio of titles from Gram Games in addition to a net increase in deferred revenue from the live service user pay bookings, in particular from Words With Friends and CSR2.
• The company expects its gross margins to be comparable with Q2 and the operating expenses to increase sequentially, primarily due to a full quarter of contribution from Gram Games.

 

Risk Factors & Stock Influences:

1. The company has new games launches in the recent past along with acquisitions. The performance of this portfolio expansion would remain a key business driver and potential stock trigger for the company
2. Despite having an extensive product portfolio, the company’s market share is significantly dependent on top products, and if its top games do not maintain their popularity, results of operations could be harmed.
3. The company faces significant competition in all aspects of its business. Therefore, in this competitive landscape, the company’s ability to sustain revenue growth while improving profitability would remain a challenge.
4. Another key risk is related to government regulations. ZNGA’s business is subject to government regulation, which mandates how it operates, increases pricing, expands contents and subjects its services to additional competitive pressures, it said, any adverse regulatory development could potentially lower market share and hence return
5. The company operates in a rapidly changing fast paced industry.  Therefore, it must continue to launch, innovate and enhance successful games that players like and attract and retain a significant number of players to grow revenue and sustain the competitive position.

 

Stock Performance

• On Friday, Oct 19th, 2018, ZNGA closed at $4.00, with a robust average volume of 11.7 million shares exchanging hands. Market capitalization is $3.441 billion. The current RSI is 45.94
• In the past 52 weeks, shares of ZNGA have traded as low as $3.20 and as high as $4.57
• At $4.00, shares of ZNGA are trading around its 50-day moving average (MA) at $4.00 and above its 200-day moving average (MA) at $3.90
• The present support and resistance levels for the stock are at $3.90 & $4.18 respectively.

 

 

Disclaimer

Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.

Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.

This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.

We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.

When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.

17B Disclosure

Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.

PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.

Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.

TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.

The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.

Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.