Gaming Companies Improving Bottom Lines and Profit Margins
Zynga’s (ZNGA) non-GAAP EPS in fiscal 2016 was $0.03. That’s expected to rise more than 200% YoY to $0.10 in fiscal 2017 and rise 30.0% YoY to $0.13 in fiscal 2018.
While Zynga (ZNGA) is primarily an Internet gaming company and 100% of its revenue is digital, it has seen a YoY growth in mobile gaming.
Analysts expect Zynga’s (ZNGA) revenue to rise 11.8% YoY in fiscal 2017 to $843.2 million and 8.7% YoY in fiscal 2018 to $916.7 million.
Electronic Arts (EA) stock has risen 50.0% since the start of 2017 and 41.0% in the trailing 12-month period.
Of the 26 analysts covering Activision Blizzard (ATVI), 21 have recommended a “buy,” one has recommended a “sell,” and four have recommended a “hold.”
Activision Blizzard (ATVI) is the largest gaming company in the world, with a market cap of approximately $48.4 billion and an enterprise value of $49.5 billion.
Of the 25 analysts tracking Activision (ATVI), 20 gave the stock a “buy” recommendation, and four analysts recommended a “hold.” There was one “sell” recommendation.
Activision Blizzard’s (ATVI) management has highlighted the importance of player investment. In 2Q17, in-game purchases generated $1 billion in revenues.
King Digital was the only business segment that saw a decline YoY (year-over-year) and quarter-over-quarter in monthly active users.
In 2Q17, the MAU numbers for Activision, Blizzard, and King Digital totaled 47 million, 46 million, and 314 million, respectively.
Activision (ATVI) is optimistic about the launch of Destiny 2, which won the E3 Game Critics’ PC Game award.
Activision Blizzard (ATVI) released several new updates for its leading gaming franchises during 2Q17. The company’s daily active users (or DAUs) rose to an all-time high in 2Q17.
Analysts expect Activision Blizzard (ATVI) to post revenues of ~$6.8 billion in fiscal 2017, a rise of 2.6% year-over-year.
Activision Blizzard (ATVI) stock has risen ~7.6% since the gaming company announced its 2Q17 results on August 3. ATVI has beaten its earnings estimates in the last five consecutive quarters.
In fiscal 3Q17, Disney’s Studio Entertainment had revenues of $2.4 billion, down 16% year-over-year. It posted operating income of $639.0 million.
Disney stated during its fiscal 3Q17 earnings call that in its first year of operations, Shanghai Disneyland has seen 13 million visitors so far.
Electronic Arts (EA) expects its gross profit to rise to 74.9% in fiscal 2018, up from 73.2% in fiscal 2017, 69.2% in fiscal 2016, and 68.3% in fiscal 2015.
EA’s digital sales in fiscal 1Q18 rose 28% year-over-year to $681 million from $568 million in fiscal 1Q17, primarily driven by strength in its Live Services and Mobile businesses.
In July 2017, EA announced that Sims 4 would be available on Xbox One (MSFT) and PlayStation 4 (SNE) in November 2017.
According to Electronic Arts (EA), players in sports gaming titles such as FIFA and Madden NFL are three times more engaged while playing competitively.