Zynga’s stock rebounded from a deep drop as expectations found fans this time

Zynga Inc. stock rebounded. Monday afternoon, after the video game publisher said it expects ad revenue growth, along with a new release of “Farmville,” to drive growth in 2022.

“The announcement has taken a lot of steam,” Zynga CEO Frank Gibeau said in an interview with MarketWatch ahead of the company’s third-quarter earnings report on Monday.

While online gaming revenue rose 31% to $571.1 million, Zynga’s fastest growing segment was embedded game ad revenue, which nearly doubled to $133.6 million. One of the things Zynga offers to its advertisers are so-called “watch for profit” ads, where players earn in-game currency or energy for watching the ad through to completion.

“The cool thing about it is that you get real value for it,” Gibo said.

Zynga
ZNGA,
+ 1.30%

It reported a third-quarter loss of $41.7 million, or 4 cents a share, compared to a loss of $122.2 million, or 11 cents a share, in the same period last year. The results included a one-time $67 million fee from the company that vacated its lease for an office space in San Francisco. Revenue rose to $704.7 million from $503.3 million in the same quarter last year, and bookings rose to $667.7 million from $628 million a year earlier.

Analysts polled by FactSet expected a loss of 9 cents a share on revenue of $663.6 million and reservations of $667.2 million, based on Zynga’s forecasts of $665 million in revenue and about $660 million in reservations. Zynga reports that the average number of mobile daily active users is up 21% to 38 million compared to last year.

Zynga also said Matthew Bromberg, its chief operating officer, has resigned. Bromberg joined the company in 2016 and is expected to stay on board until March 2022 to help with the transition. A successor has not been named.

Shares closed the regular session 1.3% higher at $6.99, up a few cents from their lowest closing level since April 2020, which was established on Friday. Zynga shares closed at a nine-year high on February 19 at $12.18, but they have taken a hit since then. Disappointing expectations in the latest earnings report.

The stock jumped nearly 7% in after-hours trading Monday.

Zynga forecast revenue of about $675 million and bookings of $715 million for the fourth quarter, and record revenue of $2.78 billion and $2.81 billion in bookings for this year. Analysts surveyed by FactSet estimated revenue of $663.6 million and bookings of $716.5 for the fourth quarter, and revenue of $2.75 billion and bookings of $2.81 billion for the year.

For 2022, Zynga expects “low double-digit” growth, driven by its direct services and full-year contributions to games such as “Farmville 3,” which was recently released, “Golf Rival” from its recent acquisition of Beijing-based StarLark, and from Rollic, the ultrawide game publisher It is based in Istanbul, in which it acquired an 80% stake. Analysts expect revenue growth of 12% in 2022.

.

Leave a Reply

Your email address will not be published.