Apps & Software

King vs. Zynga: Same Target Market, Very Different Outcomes

Thursday after the markets closed, both Zynga Inc. (NASDAQ: ZNGA) and King Digital Entertainment PLC (NYSE: KING) reported their fourth-quarter financial results. In this game of earnings, there was ultimately one winner and one loser. What is interesting is that both of freemium and social game makers have much of the same target audience.

Zynga reported $0.00 in earnings per share (EPS) on $193 million in revenue. That compared to Thomson Reuters consensus estimates of $0.00 in EPS and revenue of $201.11 million. The fourth quarter from last year had -$0.03 in EPS and $146.68 million in revenue. The company generated bookings of $182.4 million in the fourth quarter and delivered a 120% increase in fourth-quarter mobile bookings year-over-year.

Daily active users (DAUs) in the fourth quarter of 2014 were 25 million, compared to 27 million in the fourth quarter of 2013. At the same time, monthly active users (MAUs) were 108 million, compared to 112 million in the same period in the previous year.

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King Digital reported $0.57 in EPS on $559.2 million in revenue, against consensus estimates of $0.47 in EPS and $519.93 in revenue. In the same period of the previous year, it posted EPS of $0.64 and $601.4 million in revenue.

In the fourth quarter, King Digital reported a decrease of 7.2% in gross bookings to $586.3 million. For 2014 as a whole, gross bookings were up 20% to $2.4 billion.

DAUs were 149 million for the fourth quarter, compared to 124 million DAUs in the previous year. MAUs were 533 million for the fourth quarter, up from 408 million in the same period from the previous year.

Oh, and one other key difference: King announced a special dividend of $0.94 per share.

King’s quote was far shorter than Zynga’s, yet it had the oomph by saying:

Our full year and fourth quarter 2014 results demonstrate the strength of our franchises, the extraordinary power of our massive player network and our ability to repeatedly launch new top grossing games.

Zynga’s quote went on and on about mobile bookings and core franchise bookings growth, with an outline of 2015 plans and still ending the quarter with $1.1 billion in cash and cash equivalents. If you just read the quote you would have no idea that there was a negative reaction full of disappointment.

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So, how different are the outcomes when it comes to the stocks?

Shares of Zynga closed Thursday down 5.3% at $2.66. In Friday’s premarket trading, shares were down another 13% at $2.32. The stock has a consensus analyst price target of $3.31 and a 52-week trading range of $2.20 to $5.89.

King Digital shares closed up 4.2% at $14.74. In premarket trading, shares were up another 22% at $17.95. The consensus price target is $18.47, and the 52-week trading range is $10.68 to $23.48.

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