Zynga (NASDAQ: ZNGA) stock continues to rally this week after the company posted surprise second quarter earnings late last week that beat market expectations for the mobile gaming company. While the average analyst view is to Hold on Zynga, digging a little deeper reveals the story behind the numbers.
How the numbers played out
As the social video game services firm based out of San Francisco revealed its results on August 6, analysts were surprised to see non-GAAP loss of USD 0.01 per share, against the expected USD 0.02 loss per share. Revenues clocked in at USD 199.91 million. Trade experts had expected Zynga to bring in about USD 188.30 million in revenues this quarter.
Zynga saw total bookings growing to USD 174 million, representing a 4 percent increase year on year. Of this, USD 115 million came from mobile, a segment that saw a 30 percent increase year on year. As things stand, mobile bookings currently account for a significant 66 percent of all bookings for the company.
Markets respond to the good news
Expectations of the firm remain positive as they signed a licensing deal with Warner Bros to use Willy Wonka and the Chocolate Factory in their casino games. Analysts and investors anticipate a boost in bookings from this agreement.
Zynga built on the value of its popular core offerings like FarmVille, Poker, Words With Friends and Slots, while also bringing some new products to the market. The second quarter saw the launch of FarmVille: Harvest Swap and Empires & Allies.
CEO and Chairman of Zynga Mark Pincus said they were excited about the launches slated for later this year. New games on the cards include CSR2, a newer version of Slots and Dawn of Titans.
Mixed feelings among analysts
According to reports, some analysts who have tracked Zynga since 2009 with a reasonably high success rate, believe that it is a stock that is Underperforming. One analyst put his price target for Zynga at USD 2.94. On the flip side, a second analyst said he would accord it an Outperform rating with price target at USD 6, justifiable by the impending launches, the new games in its pack and the strong bookings growth he expects to see next year. With the Zynga story playing out to mixed reviews, the months ahead should tell which direction things will take.