Zynga ZNGA is due to release its fourth quarter 2020 results on February 10.
The company expects fourth quarter revenue to be $ 570 million, an increase of 41% year on year.
Zacks’ consensus estimate for revenues is set at $ 676.6 million, indicating an increase of 56.1% over the number reported in the previous year’s quarter.
In addition, the consensus mark for earnings remained unchanged at 9 cents per share for the past 30 days, suggesting a year-on-year growth of 125%.
Notably, the company’s earnings did not reach the Zacks consensus estimate for the past four quarters, with an average negative surprise of 89.8%.
Let’s see how things are getting ready for the next announcement.
Zynga Inc. price and EPS surprise
Zynga Inc. price-eps-surprise | Zynga Inc. stock quote
Factors that can influence the results of the fourth quarter
Zynga is expected to have benefited from the strength in live mobile services supported by the strong popularity of five franchises – CSR Racing, Words with friends, Zynga Poker, Empires and puzzlesand Merge Dragons!
In addition, the addition of Peak’s Toon Blast and Toy explosion it is expected to have expanded its franchise portfolio forever and driven player engagement, thereby contributing to revenue growth.
In addition, it is expected that the practices of social distance caused by the coronavirus, which confine people in their homes, have been an important growth factor in the increase in the number of active users in the quarter to be reported.
In addition, contributions from Rollic’s hyper-casual gaming portfolio likely helped to expand the company’s robust gaming portfolio and strengthened its international audience base.
In addition, the launch of Harry Potter: puzzles and spells at the end of the third quarter of 2020 it is likely to have driven the growth of players in the quarter under review.
In addition, the company launched the new Elite Tuners feature and the Design A Wrap competition in CSR Racing 2 (CSR2), in partnership with the Japanese automotive tuner Liberty Walk. Notably, CSR2 it is expected to have gained popularity with important partnerships and continued to feature automotive brand content.
In addition, the growing popularity of games like Merge Magic!, Farm Ville 3, Puzzle Combat, Empires and puzzles and CSR2 it is expected to have benefited Zynga’s net reserves and boosted the monetization of the company’s gaming portfolio.
Notably, Zynga expects net reserves to be $ 670 million, indicating a 55% growth year on year compared to the number reported in the previous year’s quarter. Zacks’ consensus estimate for reserves is currently estimated at $ 675.5 million, indicating a 55.9% growth year on year.
In addition, the strength of Zynga’s Social Slots portfolio due to games like Wizard of Oz Slots, Hit It Rich! Slots and Game of Thrones social slot casino, together with the contributions from the Casual Cards portfolio, must have had a positive impact on revenue.
For the quarter to be reported, the consensus mark for average daily users and average monthly users is 33.1 million and 96.8 million, respectively, indicating an increase of 65.5% and 46.7% year on year.
However, the decline in users of older games and mobile devices is expected to have been a buffer in the quarter under review.
In addition, intensified competition in the video game space from companies like Electronic Arts, Take-Two Interactive and Activision Blizzard likely had a negative impact on fourth quarter revenue.
What our model says
According to the Zacks model, the combination of a positive winning ESP and Zacks Rank # 1 (strong buy), 2 (buy) or 3 (wait) increases the chances of a profit hit. But this is not the case here.
Zynga currently has a Zacks Rank # 4 (Sell). You can find out the best stocks to buy or sell before they are reported with our ESP earnings filter.
Stock to consider
Here are some companies that, according to our model, have the right combination of elements to post surpassed earnings in their next releases.
Callaway Golf Company ELY has ESP gains of + 5.13% and Zacks Rank # 1. You can see the complete list of today’s Zacks Rank # 1 shares here.
Fox Corporation FOXA has ESP gains of + 145.46% and Zacks Rank # 2.
Yeti Holdings YETI has ESP gains of + 6.91% and Zacks Rank # 2.
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