What To Expect From Zynga’s Q2

by Trefis Team
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Zynga (NASDAQ:ZNGA) is set to report its Q2 2018 earnings on August 1, and the company will likely see a modest top line growth led by the mobile platform, which will likely see a double digit revenue growth. The company will also benefit from its Casual Cards acquisition. Zynga’s advertising segment has seen robust growth in the previous quarter, and we expect this trend to continue in the near term. Online Games segment will likely see growth for its key franchises, such as CSR2, Words With Friends, and social slots 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 High Single Digit Revenue Growth

We forecast Zynga’s Online Games revenues to grow in high single digits in 2018. Even though the company’s overall business has suffered over the past few years, its key gaming franchises, such as Zynga Poker, CSR 2, Farmville, and Wizard of Oz Slots continue to do well. These games account for more than half of the company’s revenues and the management plans to continue investing in them. Also, Zynga’s mobile business is showing promising trends, and saw a 10% jump in bookings in the previous quarter. Looking forward, the company will also benefit from its acquisitions, including Casual Cards, and Grant Games. Zynga recently acquired Grant Games for $250 million, and it will further its user base. The company’s popular titles include Merge Dragons! and 1010!, and are expected to add 3 million active users for Zynga. The company’s new game launches will also aid the advertising growth in the coming years. We currently forecast a low single digit growth for the company’s advertising revenues.

We expect the company to post adjusted earnings of $0.04 in 2018, and we currently have a $4 price estimate for Zynga, which implies a premium of around 10% to the current market price.


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