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Why Zynga Stock Jumped Today

By Joe Tenebruso – Nov 9, 2021 at 6:31PM

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Strong user growth and booming ad sales are fueling the interactive entertainment company's expansion.

What happened

Shares of Zynga (ZNGA) popped 9.4% on Tuesday, following the release of the video game developer's third-quarter financial results.  

So what

Zynga's revenue surged 40% year over year to $705 million, boosted by strong growth in international markets. The mobile gaming company also delivered record bookings -- an important sales metric that accounts for changes in deferred revenue -- of $668 million.

Notably, Zynga's average mobile daily active users (DAUs) climbed 21% to 38 million. Its average mobile monthly active users (MAUs), meanwhile, soared 120% to 183 million. 

A person is playing a mobile game on a smartphone.

Zynga's offerings are proving popular with gamers. Image source: Getty images.

Zynga's rapidly expanding advertising business is also helping to power its growth. The company's purchase of hyper-casual game publisher Rollic late last year has made it an increasingly powerful player in the in-game ad market. Zynga's advertising and other revenue and bookings, in turn, rocketed 99% to $134 million in the third quarter. 

All told, Zynga's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased more than fivefold to $197 million.

Now what

These strong results and positive ongoing gaming trends prompted Zynga's leadership team to lift its full-year sales and profit forecast. Management now expects the company to generate revenue and adjusted EBITDA of $2.78 billion and $616 million, respectively, in 2021. That's up from a prior projection of $2.73 billion and $575 million. 

Looking further ahead, Zynga guided for "low double-digit" revenue growth in 2022, driven by new game launches and continued growth in ad sales.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zynga. The Motley Fool has a disclosure policy.

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