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Zynga Posts a Surprise Profit

By Seth Jayson – Updated Apr 10, 2017 at 1:43PM

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Just the facts, Fool.

Zynga (Nasdaq: ZNGA) reported earnings on April 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Zynga met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped significantly. Non-GAAP earnings per share shrank significantly. GAAP earnings per share expanded to zero.

Margins increased across the board.

Revenue details
Zynga reported revenue of $263.6 million. The 15 analysts polled by S&P Capital IQ predicted a top line of $264.8 million on the same basis. GAAP reported sales were 18% lower than the prior-year quarter's $321.0 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 22 earnings estimates compiled by S&P Capital IQ predicted -$0.03 per share. Non-GAAP EPS of $0.01 for Q1 were 83% lower than the prior-year quarter's $0.06 per share. GAAP EPS shrank to zero from the prior-year quarter's -$0.12.

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 73.7%, 180 basis points better than the prior-year quarter. Operating margin was -1.9%, much better than the prior-year quarter. Net margin was 1.6%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $253.0 million. On the bottom line, the average EPS estimate is -$0.01.

Next year's average estimate for revenue is $1.04 billion. The average EPS estimate is -$0.05.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 353 members out of 683 rating the stock outperform, and 330 members rating it underperform. Among 158 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 57 give Zynga a green thumbs-up, and 101 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 $3.36.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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