Zynga Beats Expectations But Takes A Step Back Anyway

Zynga (Nasdaq: ZNGA  ) reported earnings on Feb. 5. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Zynga crushed expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue was unchanged and GAAP loss per share dropped. The non-GAAP profit was a surprise, as analysts had predicted a loss.

Margins grew across the board.

Revenue details
Zynga booked revenue of $311.2 million. The 16 analysts polled by S&P Capital IQ anticipated a top line of $248.6 million on the same basis. GAAP reported sales were 0.0% lower than the prior-year quarter's $311.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.01. The 23 earnings estimates compiled by S&P Capital IQ predicted -$0.03 per share. GAAP EPS were -$0.06 for Q4 against -$1.22 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 75.2%, 870 basis points better than the prior-year quarter. Operating margin was 12.1%, 16,910 basis points better than the prior-year quarter. Net margin was -15.6%, 12,420 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $263.0 million. On the bottom line, the average EPS estimate is -$0.01.

Next year's average estimate for revenue is $1.06 billion. The average EPS estimate is $0.01.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 309 members out of 644 rating the stock outperform, and 335 members rating it underperform. Among 174 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 65 give Zynga a green thumbs-up, and 109 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Zynga is hold, with an average price target of $3.08.

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