Zynga’s Bookings Should See Steady Growth While EBITDA Will Likely Decline In Q4

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Zynga (NASDAQ:ZNGA) is set to report its Q4 earnings on February 6, and it is expected to see low double-digit growth in total bookings, while adjusted EBITDA should decline in the low thirties percent. The company’s top line growth will likely be driven by its forever franchises, as well as strength in advertising. However, launch of a new game will lead to higher marketing costs, and impact the overall margins. We have created an interactive dashboard analysis ~ What To Expect From Zynga’s Q4You can adjust various drivers to see the impact on the earnings.

Expect Total Bookings To See Low Double-Digit Growth

Zynga will likely see modest revenues growth, while total bookings should be higher to $235 million, led by its forever franchises, Words With Friends and CSR2. However, Zynga Poker could see some softness, as per the company’s guidance. The overall top line should also benefit from the Gram Games integration, as well as continued strength in mobile bookings. Zynga is also in the process of  acquiring Helsinki-based Small Giant Games for $330 million cash, and $230 million in Zynga’s stock for an 80% stake in the company. Small Giant Games franchises, such as The Empires & Puzzles, will bolster Zynga’s forever franchises portfolio. The company saw a strong 32% growth in Advertising in the previous quarter, and it could see double-digit growth in Q4 as well. This can primarily be attributed to the increased player engagement in Words With Friends. The company launched a new game – Wonka’s World of Candy – in Q4, which will likely result in higher marketing expenses, and impact the overall margins. We forecast the adjusted EBITDA for the company to be around $32.3 million, while the reported loss for the quarter will likely be around $2 million or $0.00 per share. We currently have a $5 price estimate for Zynga, which we will update post the Q4 results announcement.

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