Tag Archive: earnings


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Zynga’s revenues for the second quarter of 2013 declined 31% year-over-year to $231 million in the midst of a challenging transition that saw former CEO Mark Pincus hand over the reins to Don Mattrick.

The company had a net loss of $16 million compared to last year’s net loss of $22.8 million during the same quarter (which also had $95.5 million of stock-based compensation expenses). If you account for that then, the company’s net loss was $6.1 million compared to last year’s net loss of $4.6 million based on non-generally accepted accounting principles. Zynga said when it laid off nearly 20 percent of its staff last month that it expected to see a net loss of between $39 million to $28.5 million so this is actually a slight earnings beat.

“We need to get back to basics and take a longer term view on our products and business, develop more efficient processes and tighten up execution all across the company,” wrote Mattrick in the release. “We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters.”

Last quarter, COO David Ko said the company was in the midst of a “pause” to re-evaluate its entire game slate and that this decision would be financially apparent in this quarter.

This quarter’s revenue is projected to be even lower in the range of $175 million to $200 million, with a net loss of $43 million to $14 million.

Through the company’s pivot onto iOS and Android, Zynga has had to compete against older and historically smaller rivals from the Facebook platform like King and Kabam. Both of those companies have fared well with King’s Candy Crush Saga bringing it the top grossing spot and numerous Kabam titles in the top 25.

In contrast, Zynga just has its longstanding Poker franchise in the U.S. top grossing 25. Even today, nearly 70 percent of the company’s monthly active users remain on the web.

The losses in Zynga’s user base from not being able to hold onto its core Facebook customers are staggering. The company’s level of daily active users is not much higher than half of where it was a year ago at 39 million this quarter compared to 72 million in 2012. It also saw 187 million monthly active users, down from 306 million users in the same time period a year before.

The company’s launches like Draw Something 2 have also underperformed without any slots in any of the top 100 charts and Zynga’s other big mobile launch, Running With Friends, remains in 45th place in the U.S. top grossing chart. Zynga had six major releases this quarter including War of the Fallen, Draw Something 2, Battlestone, Solstice Arena and Running With Friends.

But older franchises like FarmVille and FarmVille 2 continue to do well as both games have grown combined bookings by 29 percent year-over-year.

Zynga’s struggles in diversifying away from Facebook and missing the pivot to mobile ultimately convinced Pincus to give up the CEO role, although he remains chairman of the board and serves as chief product officer. It’s now Mattrick’s 15th day on the job.

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As the worldwide smartphone market slows, Samsung’s second-quarter earnings showed that it is beginning to feel the pressure despite being the world’s top smartphone vendor.

Samsung said its Q2 2013 operating profit increased 47.5% to $8.5 billion, in line with the company’s own estimate. Operating profit at its mobile division, which accounts for two-thirds of the company’s revenue and is its biggest earnings driver, rose 52% to 6.23 trillion won ($5.6 billion), but fell 3.5% from the previous quarter.

The reporting period included the launch of the Galaxy S4, Samsung’s flagship phone and its main rival to the iPhone. One month after the Galaxy S4 s launch, Samsung said it’d hit a record 10 million channel sales, but the Korean tech giant is under the same challenges as Apple thanks to a slowing global smartphone market and shrinking margins. Earlier this week, Apple reported weaker international sales, due in large part to a dramatic revenue plunge in China.

Samsung said that smartphone sales will continue to be slower in the third quarter.

“Entering into a typically strong season for the IT industry, we expect earnings to continue to increase,” said Samsung head of investor relations Robert Yi in a statement. “However, we cannot overlook delayed economic recovery in Europe and risks from increased competition for smartphone and other set products.”

LinkedIn CEO Jeff Weiner and Chairman Reid Hoffman

Asa Mathat / AllThingsD.com LinkedIn CEO Jeff Weiner and Chairman Reid Hoffman

LinkedIn posted its third-quarter earnings results on Tuesday, and it’s yet another big quarterly beat.

The company reported 39 cents in earnings per share on revenue of $393 million. That’s against analysts’ estimates of 32 cents per share on revenue of $385.41 million.

It was a good quarter for growth as well, as the company added another 21 million monthly active users to its base, bringing the total to 259 million overall. That’s 38 percent year-on-year overall growth for the company.

“Increased member growth and engagement helped drive strong financial results in the third quarter,” said LinkedIn CEO Jeff Weiner in a statement. “We continue to deliver value to professionals through investment in core products and strategic initiatives such as mobile, students, and the professional publishing platform.”

The company’s talent solutions product continues to be the main revenue driver, accounting for 57 percent of overall revenue at $224.7 million. Marketing solutions and Premium subscriptions followed at $88.5 million and $79.8 million, respectively.

The slightly downbeat point was LinkedIn’s lowered guidance for the fourth quarter coming in at about $420 million, short of the approximately $440 million analysts had expected.

Though, if you’ll recall from earlier this year, LinkedIn has consistently provided lowered guidance for coming quarters, a move some analysts think has been intended to manage future expectations – especially if the company doesn’t deliver consistently stellar results as it has in the past.

Shares dipped slightly on the news, trading down two percent at around $242.

On a conference call, Weiner highlighted the company’s mobile efforts over the past quarter, paying particular attention to the recent LinkedIn mobile product launch; along with a number of redesigns, LinkedIn introduced Intro, a way for the company to stick its data inside of the iOS email app.

Sponsored updates – the company’s version of a “native” mobile ad unit – drive two-thirds of mobile revenue. It’s certainly a significant amount, and one the company expects to grow in the future.

Amazon’s Q2 Is a Miss

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JOE KLAMAR/AFP/GettyImages

First quick look at Amazon’s earnings numbers, and it’s a miss.

The online retail giant posted a loss, at an EPS of minus two cents on revenue of $15.7 billion.

Though Amazon’s net sales rose 22 percent compared to the year-ago quarter, it’s a disappointing miss against analysts’ expectations that the company would post earnings per share of four cents to six cents on $15.74 billion in revenue.

“This past quarter, our top 10 selling items worldwide were all digital products – Kindles, Kindle Fire HDs, accessories and digital content,” CEO Jeff Bezos said in a canned statement. (Of course, with no actual sales numbers on the amount of Kindle products sold – as always.)

Not a ton of color in this release as to why Amazon missed, nor are there any notes on AmazonFresh, the company’s experimental grocery delivery service. Hopefully, CFO Tom Szkutak will address these points on the conference call with analysts coming up shortly.

Shares of Amazon were trading off around two percent on the news, at around $297 per share.

A lot of companies aspire to have a mobile strategy, and then there are companies, like Trulia, that already have the beginnings of one.

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Pete Flint, CEO of the San Francisco-based online real estate company, told AllThingsD that traffic from mobile had increased 120 percent in the fourth quarter year over year. “Mobile is an enormous opportunity for us,” he said. “At some point in the future, we expect it to generate a majority of our revenue.”

Today, the company’s stock hit a new high, closing at $29 a share, following yesterday’s release of its fourth-quarter results.

In that quarter, the company lost $1.6 million, or six cents a share, on revenue of $20.6 million. Excluding some items, Trulia would have lost three cents. Analysts were expecting the company to lose two cents a share on revenue of $19.1 million.

Flint said the average revenue per advertiser grew in the fourth quarter because of mobile and an overall increase in prices. Trulia agents are buying ads on its apps separate from the Web because that is where they are seeing the best results — and because of that, Trulia is charging more for mobile. ”Consumers are absolutely out-and-about using the apps to browse and to connect with an agent to purchase a property,” he said.

One data point backing this up is that in 82 of the top 100 U.S. cities, he said, there are more leads being sent via mobile devices to real estate professionals than through the website.

In September, Trulia went public, pricing its shares at $17 apiece to raise roughly $85 million. Flint said in hindsight, mobile was also a big factor in the success of the offering.

“As we look back, investor concern last year was for companies to execute on mobile and to have a proven track record, and we are uniquely positioned to execute on mobile,” he said.

Trulia’s closest competitor, Zillow, reported its fourth-quarter results today, and also credited mobile for some of its growth. The Seattle-based company, which makes money from charging real-estate agents subscription fees and from advertising, said in December that more than half of its visits occurred on mobile devices, with that traffic spiking to 60 percent on weekends.

Zillow reported a profit of $500,000, or two cents a share, on revenue of $34.3 million. Analysts were expecting the company to break even on revenue of $31.5 million. The company’s stock surged in after-hours trading, jumping 7 percent, or $2.88 a share, to close at $41.85.

The market values Zillow at roughly $1.3 billion, about double Trulia’s current market cap.

One lone analyst believes that Groupon has a chance to evolve beyond its current daily deals business.

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Sterne Agee’s Arvind Bhatia upgraded Groupon to “buy” from “neutral” this morning, sending the company’s stock up 27 cents, or 5 percent, to $5.56 a share in afternoon trading. At one point in pre-market trading, the stock hit as much as $5.74.

While those gains are significant considering where the shares have been trading for the past few months, the stock overall is still down more than 70 percent since Groupon’s IPO in November.

Bhatia acknowledged how out of sync his upgrade is with the bigger picture: “This is an out-of-consensus upgrade predicated on a more constructive longer-term view of the company,” he wrote in a letter to investors. He also warned that the upgrade was not a reflection of the company’s fourth-quarter results, which are being released on Feb. 27. (Bhatia believes the stock can go as high as $9 over the next 12 months.)

Rather, his thesis is based on the belief that the Chicago company — and therefore its CEO and founder Andrew Mason — can execute on a number of fronts, by turning around its international business and leveraging its mobile commerce foothold. And, even more importantly, he believes that Groupon can evolve beyond its core push business of delivering offers by email to a model where consumers will discover deals on the site through search engines and direct traffic to the site.

In November, I wrote about this evolution to a marketplace approach, which Groupon was rolling out in Chicago and New York. At the time, Jeff Holden, the company’s SVP of Product, explained that Groupon had mastered serendipity by sending offers to people they thought might like them.

But now they are trying to become a destination where people shop for things they already know they are looking to buy. In a handful of markets, consumers can now browse and search a catalog of offers – they don’t disappear after one day. Categories span everything from local deals, including auto, restaurants and spas, to products, like bed linens and pet care.

At the time, Groupon said it had amassed 27,000 deals in North America as part of the company’s new direction. That will be a critical number to watch, since having a lot of inventory will be a crucial component to its success.

Bhatia claims that the benefit to this approach is that the deals can now be marketed effectively through search engines, like Google and Bing, as opposed to sending emails (which people are tiring of). “Currently less than 5 percent of Groupon’s revenue comes from search engine marketing,” he wrote. “In contrast, an estimated 25 percent of queries on search engines are local and 50 percent of mobile searches are for local, which suggests meaningful untapped opportunity.”

Rakesh Agrawal, a business consultant and outspoken critic on Groupon, disagreed with the company’s prospects of using Google and Bing to drive sales going forward. “Search marketing is a much more complicated sell,” he said. “Even if it were successful, the revenue they could generate pales in comparison with what daily deals were throwing off.”

Groupon is expecting fourth-quarter revenue ranging between $625 million and $675 million, an increase of 27 percent to 37 percent, compared with the same period a year earlier. It expects income from operations to be between breakeven and $20 million, compared with a loss of $15 million in the fourth-quarter 2011. Analysts are forecasting a loss of two cents a share.

Amazon stock hit a 52-week high today in anticipation of a strong earnings report on Tuesday, boosted by a spike in holiday spending.

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In afternoon trading, shares were up almost $10, touching $284. A year ago, the stock was sliding toward its 52-week low of $172.

Amazon usually grows at twice the rate of the overall e-commerce market during the fourth quarter. The last three months of 2012 should be no exception.

According to comScore’s final tally for the November-December shopping season, online spending in the U.S. totaled $42.3 billion, which was a 14 percent increase over 2011, but fell short of its expectations. Ahead of the Christmas holiday, comScore was anticipating a 16 percent jump in spending.

So, if it follows form, Amazon’s year-over-year growth should end up around 30 percent.

Amazon is forecasting net sales between $20.25 billion and $22.75 billion, representing a jump of 16 percent to 31 percent.

Youssef Squali, an analyst with Cantor Fitzgerald, wrote in a note to investors today that he is expecting Amazon to report revenue of $22.05 billion, up 27 percent. The consensus by analysts is a little more bullish, at $22.3 billion.

The positive forecasts are expected in part because of the performance by others, most notably eBay and Google, which already reported fourth-quarter earnings. EBay beat analysts’ expectations by a penny, boosted by strong sales from its mobile and marketplaces division (and it, too, was trading at a 52-week high today, with a share price above $56, up more than 2 percent). Likewise, Google’s cost-per-click business increased 2 percent compared to the prior quarter, reversing a long period of declines, partly because of a strong performance by its new Shopping group.

Interestingly, halfway through the month of December, a monster quarter by Amazon was not a done deal.

There were a few signs that sales had been soft due to one concern: Procrastination. As Amazon’s base of Prime users grows, customers are becoming more comfortable delaying purchases, since they know they can get free two-day shipping on qualifying items. Coupled with Amazon’s reputation for on-time delivery, customers were able to wait until Dec. 21 in order to get packages delivered by Christmas Eve.

Another closely watched metric for Amazon will be its profit margins.

Jeff Bezos, the company’s founder and CEO, has been particularly outspoken recently about sacrificing margins for the benefit of generating more free cash flow.

Cantor Fitzgerald’s Squali is anticipating fourth-quarter operating margins of 1.3 percent, but cautions that “we have little visibility into this metric.” Amazon spends a lot of money on building new distribution centers, offering price promotions and free shipping. It is also investing heavily in cloud computing, packaging free video streaming with Amazon Prime, and its hardware division, including Kindle.

Due to those investments, operating margins may be very low.

To that end, Squali says that any commentary by Amazon’s tight-lipped management team on Tuesday will be key for the stock’s performance going forward.

On the whole, analysts are expecting Amazon to generate a profit of 29 cents a share. Amazon left itself a lot of room with its earlier guidance, saying results could be anywhere from an operating loss of $490 million to an operating profit of $310 million, compared with an operating profit of $260 million in the year-ago period.

Tune in after the bell on Tuesday for live coverage of Amazon’s results.

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