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Zynga Inc (NASDAQ:ZNGA) – A Turnaround Situation Equity

While analysts are not thrilled about Zynga Inc (NASDAQ:ZNGA) latest quarterly report, they admit that the financial report in the recent quarter is opening for a much better year. As such, analysts consider company’s shares a ‘Buy’ at existing prices, even if investors would have preferred to purchase at a lower price.

The buzz

Zynga has been a shift situation play for some time now. The firm’s revenue and other financial metrics have been not impressive in last few years. IN fact, market has been bearish on the stock, particularly from the time the interest in web real-money casino space started fading. However, its 4Q2016 were actually promising for a change. Nothing major to delight about, but still positive.

In 4Q2016, revenue was $190.5 million, closer to the high end of the projections previously reported, and a jump of 3% YoY and 4% QoQ. Bookings came at $201.5 million, that is at the high end of the projections previously reported, and higher by 11% YoY and 2% QoQ. Operating expenses amounted to $162.4 million, a drop of 9% YoY and 2% QoQ. Operating cash flow came at $27.7 million, which registered a jump of $24.3 million YoY and $6.7 million QoQ.

On a yearly basis, revenue was $741.4 million, a decline of 3% YoY, but bookings closed at $754.5 million, a jump of 8% YoY. Other than that, most other numbers were nothing to delight about. The firm continues to lose funds, with a GAAP net loss in 4Q2016 at $35.4 million, and for FY2016 it stood at $108.2 million. Most of the losses constitute of stock-based compensation while adjusted EBITDA came at $10.6 million for 4Q2016 and $107.5 million for FY2016. So overall financial performance was promising.

Zynga’s plan of “forever franchises” is approaching in the right direction. In the reported period, the firm focused on growing existing games.

Published by Chris Brown

About Me: I have a Phd in Economics Gender: Male Interests: Playing games like cricket, volleyball Favorite Music: hip hop, rock, jazz

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