Earnings Report: Zynga, Qualcomm, F5 Networks, Yum! Brands

Zynga (ZNGA $3.03 -0.32) reported first quarter earnings of $0.01 per share, excluding non-recurring items (Co guided to ($0.05)-(0.04) on Feb 5), $0.05 better than the Capital IQ consensus of ($0.04), while revenues fell 17.9% year/year to $263.6 million versus the $264.77 million consensus. Co issued downside guidance for the second quarter with EPS loss of ($0.04) – ($0.03), excluding non-recurring items versus the ($0.01) Capital IQ consensus and revenues of  $225-235 million versus the. $261.72 million consensus. Daily active users (DAUs) decreased from 65 million in the first quarter of 2012 to 52 million in the first quarter of 2013, down 21% year-over-year. On a consecutive quarter basis, DAUs were down 8% from 56 million in the fourth quarter of 2012. Monthly active users (MAUs) decreased from 292 million in the first quarter of 2012 to 253 million in the first quarter of 2013, down 13% year-over-year. On a consecutive quarter basis, MAUs were down 15% from 298 million in the fourth quarter of 2012. Monthly unique users (MUUs) decreased from 182 million in the first quarter of 2012 to 150 million in the first quarter of 2013, down 18% year-over-year. On a consecutive quarter basis, MUUs were down 10% from 167 million in the fourth quarter of 2012. Bookings were $229.8 million for the first quarter of 2013, a decrease of 30% compared to the first quarter of 2012 and a decrease of 12% compared to the fourth quarter of 2012. Q2 Bookings are projected to be in the range of $180 million to $190 million. Q2 Adjusted EBITDA is projected to be in the range of ($10) million to break even “We are encouraged by the strong execution from our teams and the breakout hit performance of FarmVille 2, which captures the imagination of nearly 40 million players every month….2013 will continue to be a transition year as we face the challenging environment on the web and invest in developing the leading franchises and network across web and mobile platforms and offer our 253 million monthly players a connected experience that can follow them from work to school to home and anywhere in between.”

Qualcomm (QCOM $62.12 -3.87) reported second quarter earnings of $1.17 per share, excluding non-recurring items, in-line with the Capital IQ consensus of $1.17, while revenues rose 23.9% year/year to $6.12 billion versus the $6.08 billion consensus.   Q2 Key Business Metrics MSM chip shipments: 173 million units, up 14 percent y-o-y and down 5 percent sequentially. December quarter total reported device sales: approx $61.1 billion, up 18 percent y-o-y and 15% QoQ. December quarter estimated 3G/4G device shipments: ~279 to 283 million units, at an estimated average selling price of approximately $214 to $220 per unit.  The company issued in-line guidance for the third quarter with EPS of f $0.97-1.05, excluding non-recurring items, versus the $1.04 Capital IQ consensus and revenues of $5.8-6.3 billion versus $5.88 billion Capital IQ consensus. The company issued guidance for FY13, raises EPS to $4.40-4.55, excluding non-recurring items, from $4.25-4.45 versus the. $4.53 Capital IQ consensus. The company raised revenues to $24.0-25.0 billion from $23.4-24.4 billion versus the $24.1 bln Capital IQ consensus.

F5 Networks (FFIV $74.89 +2.54) reported fourth quarter earnings of $1.07 per share, excluding non-recurring items, $0.01 better than the Capital IQ consensus of $1.06, while revenues rose 3.1% year/year to $350.2 million versus the $350.19 million consensus. The company issues downside guidance for Q3, sees EPS of $1.06-1.09, excluding non-recurring items versus the. $1.11 Capital IQ consensus and revenues of $355-365 million versus the $366.89 million Capital IQ consensus. The company also announced today that its board of directors had authorized an additional $200 million for the company’s common stock share repurchase program. This new authorization is incremental to the $81.3 million currently in the existing program which was initially authorized in October 2010.

YUM! Brands (YUM $66.51 +2.36) reported first quarter adjusted earnings of $0.70 per share, $0.10 better than the Capital IQ consensus of $0.60;, while revenues fell 7.6% year/year to $2.54 billion versus the $2.56 billion  consensus; worldwide system sales grew 1%, prior to FX, including 4% at Yum! Restaurants International (YRI) and 2% in the U.S. System sales declined 9% in China.  Same-store sales declined 20% in China (previously reported). Same-store sales grew 1% at YRI and 2% in the U.S. Total international development was 380 new restaurants; 88% of this development occurred in emerging markets.  Worldwide restaurant margin declined 2.7 percentage points to 15.9%, including a decline of 7.0 percentage points in China. Restaurant margin increased 1.4 percentage points at YRI and 2.4 percentage points in the U.S. Worldwide operating profit declined 14%, prior to foreign currency translation, including a 41% decline in China. Operating profit grew 19% at YRI and 5% in the U.S. 

“While better than expected, the first quarter was extremely difficult for Yum! Brands. As anticipated, intense media attention surrounding poultry supply in China significantly impacted KFC sales and profit. Earnings per share declined 8% versus prior year, as our China Division operating profit fell 41%. Operating profit increased 19% at Yum! Restaurants International and 5% in our U.S. business. The negative media surrounding poultry supply in China has subsided. We have taken steps to enhance our industry-leading supply chain practices, and we’re now in the midst of an aggressive quality assurance marketing campaign. However, our sales recovery has been adversely affected by the recent news of Avian flu. This news surfaced during the first week of April and continues to negatively impact same-store sales. We continue to remind consumers that properly cooked chicken is perfectly safe to eat. Historically, the sales impact of Avian flu publicity has initially been dramatic at KFC but relatively short-lived. We will stay the course with our plans to develop at least 700 new units in China this year to lay the foundation for future growth. We have complete confidence in a full sales recovery…There is no doubt 2013 will be a challenging year for our company. With news of Avian flu, there will obviously be more volatility with our China sales recovery. However, given better-than-expected first-quarter performance, our estimated mid-single-digit full-year EPS decline versus prior year remains unchanged. I’m confident we will end the year with momentum and restore our track record of consistently delivering double-digit EPS growth in 2014 and beyond.”