Is social game developer Zynga (ZNGA) worth a second look for investors right now? In this segment of Backstage Pass, recorded on Dec. 1, Fool contributors Brian Feroldi and Brian Withers discuss.

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Brian Feroldi: Moving on to Zynga, ticker symbol Z-N-G-A. A company that I personally wrote off as uninvestable many years ago. But wow, this business is so much more impressive than it used to be if you haven't given Zynga a look. In the most recent quarter, their average daily active users -- yes, daily -- grew 21% to 38 million. 38 million people play Zynga's games every single day. If you look on a monthly basis, that figure grew 120% to 183 million. 183 million people played Zynga's games every single month. That's staggering, those are big numbers.

Very impressive results in year-over-year basis. On the downside, if you look sequentially, quarter over quarter, those figures were actually both down about 10%. A key metric for this company is user monetization, how much money it makes per user per month. That figure actually fell 12% in the most recent quarter to about $0.19.

Why? Well, that's because the company has started to focus on hyper-casual games that you can use very occasionally. Those are monetized primarily through advertising, as opposed to some of its core legacy games, which are monetized in other ways. As a result, that's why user monetization is falling. 

However, even taking that into consideration, pay revenue, what they get from the games themselves, grew 31% to $571 million. Advertising revenue: That's a new key growth avenue for this company and its focus on hyper-casual game showcases -- that grew 99% to $134 million. You add all that up. Revenue grew 40% to $705 million. That blew past the $665 million that Wall Street was expecting.

On the downside, bookings, which is a key measure of future growth, that only grew 6% during the quarter to $668 million. So stay at home, COVID definitely is impacting this company's results. The rest of the income statement, mixed, gross margin up 200 basis points to 72%. Great.

Spending way up extensively on sales and marketing. That is a key expense for this company as it launches new games, it spends a lot to get the word out about them. Still the sales growth and gross margin was strong enough to cut this company's net loss by more than half to $42 million. And on an operating basis, operating cash flow was positive, $99 billion. That figure was down a little bit.

That's a key thing between that video game investors seem to be aware of, the difference between bookings and revenue and the accounting of that. The cash flow statement and  the income statements are just wildly different numbers. Now Zynga launched a couple of brand-new games. Something called FarmVille apparently is doing really well and that's off to a great start. Star Wars: Hunters was a new game. And it also closed out the acquisition of another company called Golf Rival.

Now for the remainder of the year, management actually raised its full-year guidance. It expects to generate $2.75 billion. That represents growth of 41%. Bookings, slightly lower growth. And for 2022 -- the company's already looking ahead --  basically they expect another low double-digit top-line growth year, likely in the low teens. So overall, this company is really focused on growth. It's working.

Brian Withers: Yeah. These guys have come a long, long way since when FarmVille was like they're only gig and they were like extremely dependent on Facebook's platform for their revenue.

But I still can't get my head around owning the stock. I'm not a big video gamer, so I feel like I'm at a bit of a disadvantage. And I see when I look at your Fool profile, you don't own the stock, either. Have you ever owned it and could you see yourself owning it in the future?

Brian Feroldi: I never have. Like I said, I've wrote it off before, so I think David Gardner recommended it two or three years ago. I don't even know how long ago now for Stock Advisor and I was like, Zynga? Zynga? Isn't that [laughter]  the bad video game company?

But he recognized that the company had rebuilt its business from the ground up. It used to be so dependent on Facebook for everything distribution, and then Facebook one day said bye-bye -- which, by the way, just showcases again customer concentration is a real problem.

But the company has since rebuilt its business from the ground up. It's been very acquisitive in recent years to add these hyper-casual games on. But that is something that you have to be aware of when measuring video game companies. The income statement doesn't tell the full story. You really have to go to the cash flow statement to see it. Could I see myself owning it someday? Yes. I just don't own it yet.

Brian Withers: All right. Thanks for that insightful answer.