- Delivers Full Year 2013 Profitability on an
Adjusted EBITDA Basis and Beats Q4 Outlook
- Charts Course for Growth in 2014
- Announces Agreement to Acquire Leading Mobile
Game Developer NaturalMotion, Creator of Hit Mobile Games CSR
Racing and Clumsy Ninja
- Announces Cost Reduction Plan
Conference Call Today at 3:00 p.m. PST to Discuss
Q4 and Full Year Financial Results and NaturalMotion
Acquisition
Zynga Inc. (Nasdaq:ZNGA), a leading social game developer, today
announced financial results for the fourth quarter and full year
ended December 31, 2013. Zynga will hold a conference call to
discuss these financial results today, January 30, 2014, at 3:00
p.m. PST (6:00 p.m. EST) in place of the previously announced date
of February 6, 2014. The live webcast of Zynga's earnings
conference call can be accessed at investor.zynga.com. Following
the call, a replay of the webcast will be available through Zynga's
website.
Recent Business Highlights
- Outperforms high end of Q4 2013 outlook with bookings of $147M
and Adjusted EBITDA of $3M
- Agrees to acquire leading mobile game and technology developer,
NaturalMotion; expanding Zynga's creative pipeline, accelerating
planned mobile growth, and bringing in next-generation technology
and tools
- Begins to implement 15% global workforce reduction and expand
cost savings plan; expects to generate approximately $33 to $35
million in pre-tax savings for 2014
- Achieves victory in patent lawsuit resulting in unanimous
verdict of non-infringement in Zynga's favor
Recent Product Highlights
- Words With Friends franchise achieved 33% sequential quarterly
growth in bookings, delivering the highest quarterly bookings in
the game's five year history
- Zynga's Casino franchise achieved sequential quarterly growth
in bookings for the first time in the past 18 months; Zynga Poker
grew mobile monthly active users 8% sequentially
- Launched new mobile slots product, Hit It Rich! on tablet;
currently #1 on the free iPad charts in the Casino category
"Over the last 7 months, our teams have been working with a
sense of urgency. We finished 2013 in a strong position and expect
2014 to be a growth year. We believe that Q1 will be a solid
foundation for that growth and we expect substantial improvements
for the remainder of the year across audience, bookings and
Adjusted EBITDA. The investments we are making to grow and sustain
our franchises are beginning to bear fruit, particularly in Zynga
Casino and Words With Friends. We are committed to refining our
skills in the art and science of building new hit games and in
2014, we will move aggressively into new genres that align with the
timeless, entertainment categories that consumers care about. Our
market is growing as measured by device, audience and dollars and
we have the privilege to compete in one of the fastest growing
parts of the entertainment industry. We have an ambitious agenda
and we are moving quickly to add capabilities that are
complementary and strategic to our core growth plans," said Don
Mattrick, CEO of Zynga.
Financial
Highlights (in thousands, except per share data) |
|
|
|
|
|
|
Quarter
ended |
Year
ended |
|
December 31,
2013 |
December 31,
2012 |
December 31,
2013 |
December 31,
2012 |
GAAP Results |
|
|
|
|
Revenue |
$ 176,362 |
$ 311,165 |
$ 873,266 |
$ 1,281,267 |
Net income (loss) |
$ (25,242) |
$ (48,561) |
$ (36,982) |
$ (209,448) |
Diluted net income (loss) per share |
$ (0.03) |
$ (0.06) |
$ (0.05) |
$ (0.28) |
|
|
|
|
|
Non-GAAP Results |
|
|
|
|
Bookings |
$ 146,677 |
$ 261,269 |
$ 716,176 |
$ 1,147,627 |
Adjusted EBITDA |
$ 2,603 |
$ 45,018 |
$ 46,549 |
$ 213,233 |
Non-GAAP net income |
$ (20,834) |
$ 6,935 |
$ (34,073) |
$ 58,178 |
Non-GAAP earnings per share |
$ (0.03) |
$ 0.01 |
$ (0.04) |
$ 0.07 |
Zynga to Acquire Leading Mobile Game Developer
NaturalMotion
Zynga also announced today, an agreement to acquire
privately-held NaturalMotion, a leading mobile game and technology
developer for approximately $527 million in cash and equity, based
on Zynga's closing price on January 29, 2014. NaturalMotion is led
by a seasoned team of technology innovators, including Chief
Executive Officer and Co-Founder Torsten Reil and Vice President of
Games Barclay Deeming. NaturalMotion was founded in 2001 and has
approximately 260 employees across Oxford, London, Brighton and San
Francisco.
NaturalMotion's hit mobile games, CSR Racing and Clumsy Ninja,
are in the popular consumer categories of Racing and People
simulation. NaturalMotion possesses industry leading technology and
tools and its proven simulation technologies have powered some of
the biggest console games and blockbuster movies.
Key Business Terms
- At closing, NaturalMotion's shareholders and vested option
holders will receive an aggregate of $391 million in cash and
approximately 39.8 million shares of Zynga Class A Common
Stock
- Approximately 11.6 million of the 39.8 million shares will be
issued to continuing employees and will be subject to vesting over
a three-year period
Strategic Rationale
- Transaction is expected to be accretive to non-GAAP earnings
and generate bookings in the range of $70 to $80 million and
Adjusted EBITDA of $15 to $25 million in 2014
- Expands Zynga's creative pipeline into two new consumer
categories – Racing and People simulation
- Accelerates mobile growth, bringing a track record of success
and creative and technical talent
- Provides cutting edge technology and tools, including Euphoria,
to fast track Zynga's ability to deliver hit games
"We believe that bringing Zynga and NaturalMotion together is
the right step at the right time," said Mattrick. "Our acquisition
of NaturalMotion will allow us to significantly expand our creative
pipeline, accelerate our mobile growth and bring next-generation
technology and tools to Zynga that we believe will fast track our
ability to deliver more hit games. Their creative portfolio aligns
perfectly with our content strategy as Zynga will now have five top
brands and capabilities in the Farm, Casino, Words, Racing and
People categories. We are confident that we will build upon
our market position with complementary strengths to generate long
term value for our consumers, our employees and our
shareholders."
"NaturalMotion set out to make games that wow millions of
people, by being obsessed with quality, disrupting and creating
genres, and using almost magical technology. When we started
talking to Don and his team, it quickly became clear that they
shared this vision. Don's background in AAA games
and Zynga's expertise in social game play
and large-scale game operations will be invaluable
to helping us grow our existing CSR and Clumsy
Ninja franchises and maximize the breakout potential of our
upcoming titles. We've reached our first milestones – creating #1
top-grossing and top-free titles – on our own. We can't wait to see
what we can achieve together with Zynga," said Torsten Reil, CEO
and Co-Founder, NaturalMotion.
Cost Reduction Plan
Today Zynga announced a cost reduction plan expected to generate
pre-tax savings in the range of $33 million to $35 million in 2014,
excluding an estimated $15 million to $17 million pre-tax
restructuring charge in Q1. As part of the plan, Zynga expects
to complete a workforce reduction of approximately 314 employees or
approximately 15% of its current workforce, and implement
additional cost reduction measures, including lowering its spend on
datacenter infrastructure.
Fourth Quarter Business Highlights
- Average daily bookings per average DAU (ABPU) increased from
$0.051 in the fourth quarter of 2012 to $0.060 in the fourth
quarter of 2013, up 19% year-over-year. On a consecutive
quarter basis, ABPU was up 10% from $0.055 in the third quarter of
2013.
- Monthly Unique Payers (MUPs) in the fourth quarter of 2013 were
1.3 million, compared to 2.9 million in the fourth quarter of 2012.
On a consecutive quarter basis, MUPs were down 16% from 1.6 million
in the third quarter of 2013.
- As of December 31, 2013, Zynga had 3 of the top 10 games on
Facebook, based on DAUs as reported by the Facebook API, consisting
of its most established games, FarmVille 2, Words With Friends and
Zynga Poker.
- In the fourth quarter of 2013, Words With Friends, achieved
record bookings in its five year history.
- Daily active users (DAUs) in the fourth quarter of 2013 were 27
million, compared to 56 million in the fourth quarter of
2012. On a consecutive quarter basis, DAUs were down 12% from
30 million in the third quarter of 2013. Web DAUs and Mobile DAUs
were 14 million and 13 million in the fourth quarter of 2013,
respectively.
- Monthly active users (MAUs) in the fourth quarter of 2013 were
112 million, compared to 298 million in the fourth quarter of
2012. On a consecutive quarter basis, MAUs were down 16% from
133 million in the third quarter of 2013. Web MAUs and Mobile MAUs
were 69 million and 43 million in the fourth quarter of 2013,
respectively.
- Monthly unique users (MUUs) in the fourth quarter of 2013 were
80 million, compared to 167 million in the fourth quarter of
2012. On a consecutive quarter basis, MUUs were down 17% from
97 million in the third quarter of 2013.
- In the fourth quarter of 2013, Zynga recorded a restructuring
charge of $7 million related to the closure of certain facilities
as part of its continued action to reduce its long-term cost
structure.
Fourth Quarter 2013 Financial Summary
- Revenue: Revenue was $176 million for the
fourth quarter of 2013, a decrease of 43% compared to the fourth
quarter of 2012 and a decrease of 13% compared to the third quarter
of 2013. Online game revenue was $152 million, a decrease of 44%
compared to the fourth quarter of 2012 and a decrease of 13%
compared to the third quarter of 2013. Advertising revenue was $24
million, a decrease of 35% compared to the fourth quarter of 2012
and a decrease of 15% compared to the third quarter of
2013. FarmVille 2, Zynga Poker, and FarmVille accounted for
26%, 21% and 15% of online game revenue, respectively, for the
fourth quarter of 2013 compared to 22%, 19% and 18%, respectively,
for the third quarter of 2013.
- Bookings: Bookings were $147 million for the
fourth quarter of 2013, a decrease of 44% compared to the fourth
quarter of 2012 and a decrease of 4% compared to the third quarter
of 2013. Web bookings were $96 million for the fourth quarter
of 2013, compared to $207 million for the fourth quarter of 2012
and $106 million for the third quarter of 2013. Mobile
bookings were $51 million for the fourth quarter of 2013, compared
to $54 million for the fourth quarter of 2012 and $46 million for
the third quarter of 2013.
- Net loss: Net loss was $25 million for the
fourth quarter of 2013, down from a net loss of $49 million for the
fourth quarter of 2012 and up from a net loss of $68 thousand for
the third quarter of 2013.
- Adjusted EBITDA: Adjusted EBITDA was $3
million for the fourth quarter of 2013 compared to $45 million for
the fourth quarter of 2012 and $7 million in the third quarter of
2013.
- Non-GAAP net income (loss): Non-GAAP net
loss was $21 million for the fourth quarter of 2013, compared to
non-GAAP net income of $7 million in the fourth quarter of 2012 and
non-GAAP net loss of $16 million in the third quarter of 2013.
- Net loss per share: Diluted net loss per
share was $0.03 for the fourth quarter of 2013 compared to a net
loss per share of $0.06 for the fourth quarter of 2012 and $0.00
for the third quarter of 2013.
- Non-GAAP EPS: Non-GAAP EPS was ($0.03)
for the fourth quarter of 2013 compared to $0.01 for the fourth
quarter of 2012 and ($0.02) for the third quarter of 2013.
- Cash and cash flow: As of December 31, 2013,
cash, cash equivalents and marketable securities were approximately
$1.54 billion, compared to $1.52 billion as of September 30, 2013.
Cash flow from operations was $8 million for the fourth quarter of
2013, compared to $20 million for the fourth quarter of
2012. Free cash flow was $7 million for the fourth quarter of
2013 compared to $30 million for the fourth quarter of 2012.
2013 Annual Financial Summary
- Revenue: Revenue was $873 million in
2013, a decrease of 32% on a year-over-year basis. Online game
revenue was $759 million, a decrease of 34% on a year-over-year
basis. Advertising revenue was $114 million, a decrease of 17% on a
year-over-year basis.
- Bookings: Bookings were $716 million in 2013,
a decrease of 38% on a year-over-year basis.
- Net loss: Net loss was $37 million in 2013,
which included $84 million of stock-based expense, $45 million of
restructuring expense and a $28 million income tax benefit.
- Adjusted EBITDA: Adjusted EBITDA was $47
million in 2013, a decrease of 78% year-over-year, primarily due to
the decline in bookings.
- Non-GAAP net loss: Non-GAAP net loss was $34
million in 2013, a decrease of 159% year-over-year, primarily due
to the decline in bookings.
- Net loss per share: Basic and diluted net loss
per share was $0.05 for the full year 2013, compared to a net loss
per share of $0.28 for the full year 2012.
- Non-GAAP EPS: Non-GAAP EPS was ($0.04) for the
full year 2013, compared to $0.07 for the full year 2012.
- Cash and Cash flow: As of December 31, 2013,
cash, cash equivalents and marketable securities were approximately
$1.54 billion, compared to $1.65 billion as of December 31, 2012.
Cash flow from operations was $29 million for the year ended
December 31, 2013, compared to $196 million for the year ended
December 31, 2012. Free cash flow was $10 million for the year
ended December 31, 2013 as compared to ($114) million for the year
ended December 31, 2012 as reported, or $119 million excluding the
purchase of the company's headquarters.
Q1 2014 and Full Year Outlook
Zynga's outlook for the first quarter of 2014, including the
expected impact of the NaturalMotion acquisition is as follows:
- Revenue is projected to be in the range of $155 million to $165
million
- Net loss is projected to be in the range of $56 million to $49
million, including a restructuring charge of approximately $15
million to $17 million
- Diluted net loss per share is projected to be in the range of
$0.07 to $0.06, based on a share count of approximately 860 million
shares
- Bookings are projected to be in the range of $138 million to
$148 million
- Adjusted EBITDA is projected to be in the range of $5 million
to $10 million
- Non-GAAP loss per share is projected to $0.01, based on a share
count of approximately 860 million shares
Zynga's outlook for 2014 including the expected impact of the
proposed NaturalMotion acquisition is as follows:
- Bookings are projected to be in the range of $760 million to
$810 million
- Adjusted EBITDA is projected to be in the range of $65 million
to $100 million
- Non-GAAP EPS is projected to be in the range of $0.01 to $0.03,
based on a share count of approximately 985 million shares
Conference Call Details
Zynga will host a conference call today, January 30, 2014, at
3:00 pm PST (6:00 pm EST) to discuss financial results and the
NaturalMotion acquisition. A live webcast of the conference call
and supplemental slides will be accessible from the Investor
Relations page of the company's website at
http://investor.zynga.com and a replay will be archived and
accessible at the same website after the call.
About Zynga Inc.
Zynga Inc. is a leading provider of social game services, which
include popular web and mobile franchises such as FarmVille, Words
With Friends and Zynga Poker that are played by millions of
consumers around the world. For the quarter ended December 31,
2013, Zynga had approximately 112 million monthly active users
playing its games. Zynga's games are available on a number of
global platforms, including Facebook, Zynga.com, Apple iOS and
Google Android. Zynga is headquartered in San Francisco, Calif.
Learn more about Zynga at http://blog.zynga.com or follow us on
Twitter and Facebook.
The Zynga Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11743
Forward-Looking Statements
This press release contains forward-looking statements relating
to, among other things, our outlook for first quarter and full year
2014 revenue, net loss, EPS, weighted average diluted share count,
bookings, Adjusted EBITDA, non-GAAP net loss, non-GAAP EPS,
non-GAAP weighted average diluted share count, our future
operational and strategic plans; the financial and operational
impact of our expected acquisition of NaturalMotion, including but
not limited to the expected impact on our earnings, bookings and
Adjusted EBITDA results in 2014 and our expected ability to expand
our creative pipeline, accelerate our mobile growth and fast track
our ability to deliver more hit games; the results and structure of
our announced cost reduction plan; our ability to strengthen the
core of our business and achieve future growth and profits; our
ability to successfully transition our business to take advantage
of the market opportunity in our industry; our ability to launch
successful new games and hit games for web and mobile generally and
deliver compelling entertainment experiences.
Forward-looking statements often include words such as "outlook,"
"projected," "intends," "will," "anticipate," "believe," "target,"
"expect," and statements in the future tense are generally
forward-looking statements. The achievement or success of the
matters covered by such forward-looking statements involves
significant risks, uncertainties, and assumptions. Our actual
results could differ materially from those predicted or implied,
and reported results should not be considered as an indication of
our future performance. Factors that could cause or contribute to
such differences include, but are not limited to, our relationship
with Facebook or changes in the Facebook platform, delays or other
challenges in the completion of the NaturalMotion acquisition, its
integration and the success of its current and future games as part
of Zynga, delays or challenges in implementing our reduction in
force or other cost-cutting activities, attrition and declines in
our existing games, our ability to launch new games in a timely
manner and monetize these games effectively on the web and on
mobile, our ability to control and reduce expenses, our exposure to
illegitimate credit card activity and other security risks, sales
or purchases of virtual goods used in Zynga Poker or our other
games through unauthorized or fraudulent third-party websites, our
ability to anticipate and address technical challenges that
may arise, competition, changing interests of players, intellectual
property disputes or other litigation, asset impairment
charges, our ability to retain key employees, acquisitions by
us, and changes in corporate strategy or management.
More information about factors that could affect our operating
results is included under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Quarterly Report on Form 10-Q for the
three months ended September 30, 2013 and in our Annual Report
on Form 10-K for the year ended December 31, 2012, copies of
which may be obtained by visiting our Investor Relations web site
at http://investor.zynga.com or the SEC's web site at www.sec.gov.
Undue reliance should not be placed on the forward-looking
statements in this release, which are based on information
available to us on the date hereof. There is no guarantee that the
circumstances described in our forward-looking statements will
occur. We assume no obligation to update such statements. The
results we report in our Annual Report on Form 10-K for the year
ended December 31, 2013 could differ from the preliminary results
we have announced in this press release.
Non-GAAP Financial Measures:
We have provided in this release non-GAAP financial information
including bookings, Adjusted EBITDA, free cash flow, non-GAAP net
income and non-GAAP EPS, as a supplement to the consolidated
financial statements, which are prepared in accordance with
generally accepted accounting principles ("GAAP"). Management uses
these non-GAAP financial measures internally in analyzing our
financial results to assess operational performance and liquidity.
The presentation of this financial information is not intended to
be considered in isolation or as a substitute for the financial
information prepared in accordance with GAAP. We believe that
both management and investors benefit from referring to these
non-GAAP financial measures in assessing our performance and when
planning, forecasting and analyzing future periods. We believe
these non-GAAP financial measures are useful to investors because
they allow for greater transparency with respect to key financial
metrics we use in making operating decisions and because our
investors and analysts use them to help assess the health of our
business. We have provided reconciliations between our historical
and first quarter 2014 outlook for non-GAAP financial measures to
the most directly comparable GAAP financial measures. However,
we have not provided reconciliation of full year 2014 bookings
outlook to revenue, Adjusted EBITDA outlook to net income (loss),
non-GAAP effective tax rate outlook to GAAP effective tax rate or
non-GAAP EPS outlook to GAAP EPS because certain reconciling items
necessary to accurately project revenue (including the projected
mix of virtual goods sold in our games, and the projected estimated
average lives of durable virtual goods for our games) for a full
year are not in our control and cannot be reasonably projected due
to variability from period to period caused by changes in player
behavior and other factors. As revenue and/or net income for
the applicable future period is a necessary input to determine all
of these comparable GAAP figures, we are not able to provide these
reconciliations for the full year 2014. For the same reason,
we have also not provided a reconciliation of our outlook for the
impact on bookings, Adjust EBITDA and non-GAAP EPS related to the
NaturalMotion acquisition.
Some limitations of bookings, Adjusted EBITDA, non-GAAP net
income, non-GAAP EPS, and free cash flow:
- Adjusted EBITDA and non-GAAP net income (loss) do not include
the impact of stock-based expense, asset impairment charges,
acquisition-related contingent consideration and restructuring
expense;
- Bookings, Adjusted EBITDA and non-GAAP net income (loss) do not
reflect that we defer and recognize online game revenue and revenue
from certain advertising transactions over the estimated average
life of virtual goods or as virtual goods are consumed;
- Adjusted EBITDA does not reflect income tax expense;
- Adjusted EBITDA does not include other income and expense,
which includes foreign exchange gains and losses, interest income,
and the net gain from the termination of our lease and purchase of
our corporate headquarters building;
- Adjusted EBITDA excludes both depreciation and amortization of
intangible assets, while non-GAAP net income excludes amortization
of intangible assets from acquisitions. Although depreciation and
amortization are non-cash charges, the assets being depreciated and
amortized may have to be replaced in the future;
- Adjusted EBITDA and non-GAAP net income (loss) do not include
gains and losses associated with significant legal
settlements;
- Non-GAAP net income (loss) does not include the net gain from
the termination of our lease and purchase of the Company's
corporate headquarters building;
- Non-GAAP EPS gives effect to all dilutive awards based on the
treasury stock method that were excluded from the GAAP diluted
earnings per share calculation;
- Free cash flow is derived from net cash provided by operating
activities less cash spent on capital expenditures, including the
purchase of our corporate headquarters building, and removing the
excess income tax benefits or costs associated with stock-based
awards; and
- Other companies, including companies in our industry, may
calculate bookings, Adjusted EBITDA, non-GAAP net income (loss),
non-GAAP EPS and free cash flow differently or not at all, which
will reduce their usefulness as a comparative measure.
Because of these limitations, you should consider bookings,
Adjusted EBITDA, non-GAAP net income (loss), non-GAAP EPS, and free
cash flow, along with other financial performance measures,
including revenue, net income (loss), diluted net loss per share,
cash flow from operations and GAAP operating margin and our
other financial results presented in accordance with GAAP. See the
GAAP to non-GAAP reconciliations below for further details.
|
ZYNGA
INC. |
CONSOLIDATED BALANCE
SHEETS |
(In thousands,
unaudited) |
|
|
|
|
December 31, |
December 31, |
|
2013 |
2012 |
Assets |
|
|
Current assets: |
|
|
Cash and cash
equivalents |
$ 465,523 |
$ 385,949 |
Marketable securities |
659,973 |
898,821 |
Accounts Receivable |
65,667 |
106,327 |
Income tax receivable |
6,943 |
5,607 |
Deferred tax assets |
16,293 |
30,122 |
Restricted cash |
3,493 |
28,152 |
Other current assets |
23,507 |
29,392 |
Total current assets |
1,241,399 |
1,484,370 |
|
|
|
Long-term marketable securities |
416,474 |
367,543 |
Goodwill |
227,989 |
208,955 |
Other intangible assets, net |
18,282 |
33,663 |
Property and equipment, net |
348,793 |
466,074 |
Other long-term assets |
26,148 |
15,715 |
Total assets |
$ 2,279,085 |
$ 2,576,320 |
|
|
|
Liabilities and stockholders' equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 20,973 |
$ 23,298 |
Other current
liabilities |
68,866 |
146,883 |
Deferred revenue |
186,663 |
338,964 |
Total current liabilities |
276,502 |
509,145 |
|
|
|
Long-term debt |
-- |
100,000 |
Deferred revenue |
3,252 |
8,041 |
Deferred tax liabilities |
-- |
24,584 |
Other non-current liabilities |
122,060 |
109,047 |
Total liabilities |
401,814 |
750,817 |
|
|
|
Stockholders' equity: |
|
|
Common stock and additional paid in
capital |
2,823,743 |
2,725,605 |
Treasury stock |
-- |
(295,113) |
Accumulated other comprehensive income
(loss) |
(1,046) |
(1,447) |
Accumulated deficit |
(945,426) |
(603,542) |
Total stockholders' equity |
1,877,271 |
1,825,503 |
Total liabilities and stockholders'
equity |
$ 2,279,085 |
$ 2,576,320 |
|
ZYNGA
INC. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In thousands, except
per share data, unaudited) |
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
Revenue: |
|
|
|
|
Online game |
$ 152,310 |
$ 274,337 |
$ 759,572 |
$ 1,144,252 |
Advertising |
24,052 |
36,828 |
113,694 |
137,015 |
Total Revenue |
176,362 |
311,165 |
873,266 |
1,281,267 |
Costs and expenses: |
|
|
|
|
Cost of revenue |
58,876 |
77,056 |
248,358 |
352,169 |
Research and development |
78,475 |
131,847 |
413,001 |
645,648 |
Sales and marketing |
24,763 |
32,446 |
104,403 |
181,924 |
General and
administrative |
41,725 |
32,206 |
162,918 |
189,004 |
Impairment of intangible
assets |
-- |
-- |
10,217 |
95,493 |
Total costs and expenses |
203,839 |
273,555 |
938,897 |
1,464,238 |
Income (loss) from operations |
(27,477) |
37,610 |
(65,631) |
(182,971) |
Interest income |
915 |
1,230 |
4,148 |
4,749 |
Other income (expense), net |
1,079 |
(1,111) |
(3,386) |
18,647 |
Income (loss) before income taxes |
(25,483) |
37,729 |
(64,869) |
(159,575) |
Provision for income taxes |
(241) |
86,290 |
(27,887) |
49,873 |
Net income (loss) |
$ (25,242) |
$ (48,561) |
$ (36,982) |
$ (209,448) |
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
Basic and diluted |
$ (0.03) |
$ (0.06) |
$ (0.05) |
$ (0.28) |
|
|
|
|
|
Weighted average
common shares used to compute net income (loss) per
share: |
|
|
|
|
|
|
|
Basic and diluted |
820,435 |
771,533 |
799,794 |
741,177 |
|
|
|
|
|
Stock-based expense included in the above
line items: |
|
|
|
|
Cost of revenue |
$ 819 |
$ 1,018 |
$ 468 |
$ 12,116 |
Research and development |
15,024 |
15,395 |
61,931 |
200,640 |
Sales and marketing |
(248) |
3,528 |
8,079 |
24,684 |
General and administrative |
3,732 |
(5,079) |
13,915 |
44,546 |
Total stock-based expense |
$ 19,327 |
$ 14,862 |
$ 84,393 |
$ 281,986 |
|
ZYNGA
INC. |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(In thousands,
unaudited) |
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
Operating activities |
|
|
|
|
Net income (loss) |
$ (25,242) |
$ (48,561) |
$ (36,982) |
$ (209,448) |
Adjustments to reconcile net loss to net cash
provided by operating activities: |
|
|
|
|
Depreciation and amortization |
32,142 |
33,430 |
129,047 |
141,479 |
Stock-based expense |
19,327 |
14,862 |
84,393 |
281,986 |
Accretion and amortization on marketable
securities |
3,265 |
5,165 |
17,575 |
17,223 |
Net gain on termination of lease and
purchase of building |
-- |
-- |
-- |
(19,886) |
(Gain) loss from sales of investments,
assets and other, net |
710 |
724 |
8,147 |
563 |
Tax benefits from stock-based awards |
(452) |
15,972 |
(11,244) |
21,652 |
Excess tax benefits from stock-based
awards |
452 |
(15,972) |
11,244 |
(21,652) |
Deferred income taxes |
(513) |
14,550 |
(18,766) |
(43,841) |
Impairment of intangible assets |
-- |
-- |
10,217 |
95,493 |
Changes in operating assets and
liabilities: |
|
|
|
|
Accounts receivable, net |
904 |
(726) |
40,806 |
34,338 |
Income tax receivable |
(867) |
1,157 |
(1,336) |
12,976 |
Other assets |
3,738 |
10,988 |
3,932 |
19,908 |
Accounts payable |
403 |
(14,272) |
(2,325) |
(21,312) |
Deferred revenue |
(29,685) |
(49,896) |
(157,090) |
(133,640) |
Other liabilities |
3,550 |
52,358 |
(48,944) |
19,928 |
Net cash provided by operating
activities |
7,732 |
19,779 |
28,674 |
195,767 |
|
|
|
|
|
Investing activities |
|
|
|
|
Purchase of corporate headquarters
building |
-- |
-- |
-- |
(233,700) |
Purchases of marketable securities |
(252,977) |
(298,815) |
(1,074,919) |
(1,826,137) |
Sales of marketable securities |
118,702 |
73,711 |
353,603 |
223,828 |
Maturities of marketable securities |
191,820 |
206,218 |
891,238 |
647,916 |
Acquisition of property and equipment |
(469) |
(6,250) |
(7,813) |
(98,054) |
Proceeds from sale of property and
equipment |
3,057 |
-- |
3,057 |
-- |
Business acquisitions, net of cash
acquired |
-- |
-- |
(18,054) |
(205,510) |
Restricted cash |
-- |
443 |
227 |
6,979 |
Equity method investment |
-- |
(10,000) |
-- |
(10,000) |
Other investing activities, net |
(91) |
-- |
137 |
(2,256) |
Net cash (used in) provided by investing
activities |
60,042 |
-34,693 |
147,476 |
(1,496,934) |
|
|
|
|
|
Financing activities |
|
|
|
|
Repurchase of common stock |
-- |
(11,756) |
(9,302) |
(11,756) |
Proceeds from debt, net of issuance
costs |
-- |
-- |
-- |
99,780 |
Taxes paid related to net share settlement of
equity awards |
(356) |
(238) |
(1,387) |
(26,307) |
Proceeds from exercise of stock options and
warrants |
11,793 |
2,670 |
18,223 |
16,960 |
Proceeds from employee stock purchase
plan |
-- |
-- |
7,892 |
4,489 |
Excess tax benefits from stock-based
awards |
(452) |
15,972 |
(11,244) |
21,652 |
Repayment of debt |
-- |
-- |
(100,000) |
-- |
Net cash provided by financing
activities |
10,985 |
6,648 |
(95,818) |
104,818 |
|
|
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
47 |
(144) |
(757) |
(45) |
|
|
|
|
|
Net increase in cash and cash
equivalents |
78,806 |
(8,410) |
79,575 |
(1,196,394) |
Cash and cash equivalents, beginning of
period |
386,718 |
394,359 |
385,949 |
1,582,343 |
|
|
|
|
|
Cash and cash equivalents, end of period |
$ 465,524 |
$ 385,949 |
$ 465,524 |
$ 385,949 |
|
ZYNGA
INC. |
RECONCILIATION OF GAAP
TO NON-GAAP RESULTS |
(In thousands, except
per share data, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
Twelve months
ended |
|
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
Reconciliation of Revenue to
Bookings |
|
|
|
|
Revenue |
$ 176,362 |
$ 311,165 |
$ 873,266 |
$ 1,281,267 |
Change in deferred revenue |
(29,685) |
(49,896) |
(157,090) |
(133,640) |
Bookings |
$ 146,677 |
$ 261,269 |
$ 716,176 |
$ 1,147,627 |
Reconciliation of Net income (loss)
to Adjusted EBITDA |
|
|
|
|
Net income (loss) |
$ (25,242) |
$ (48,561) |
$ (36,982) |
$ (209,448) |
Provision for (benefit from) income
taxes |
(241) |
86,290 |
(27,887) |
49,873 |
Other income (expense), net |
(1,079) |
1,111 |
3,386 |
(18,647) |
Interest income |
(915) |
(1,230) |
(4,148) |
(4,749) |
Restructuring expense |
7,366 |
7,862 |
44,683 |
7,862 |
Legal settlement |
-- |
1,150 |
-- |
3,024 |
Depreciation and amortization |
32,142 |
33,430 |
129,047 |
141,479 |
Impairment of intangible assets |
-- |
-- |
10,217 |
95,493 |
Acquisition-related contingent
consideration |
930 |
-- |
930 |
-- |
Stock-based compensation |
19,327 |
14,862 |
84,393 |
281,986 |
Change in deferred revenue |
(29,685) |
(49,896) |
(157,090) |
(133,640) |
Adjusted EBITDA |
$ 2,603 |
$ 45,018 |
$ 46,549 |
$ 213,233 |
Reconciliation of Net income to
Non-GAAP net income |
|
|
|
|
Net income (loss) |
$ (25,242) |
$ (48,561) |
$ (36,982) |
$ (209,448) |
Impairment of intangible assets |
-- |
-- |
10,217 |
95,493 |
Acquisition-related contingent
consideration |
930 |
-- |
930 |
-- |
Stock-based compensation |
19,327 |
14,862 |
84,393 |
281,986 |
Amortization of intangible assets from
acquisitions |
726 |
4,845 |
10,341 |
39,843 |
Change in deferred revenue |
(29,685) |
(49,896) |
(157,090) |
(133,640) |
Restructuring expense |
7,366 |
7,862 |
44,683 |
7,862 |
Legal settlements |
-- |
1,150 |
-- |
3,024 |
Gain on purchase of corporate headquarters
building |
-- |
-- |
-- |
(19,886) |
Tax effect of non-GAAP adjustments to net
income |
5,744 |
76,673 |
9,435 |
(7,056) |
Non-GAAP net income |
$ (20,834) |
$ 6,935 |
$ (34,073) |
$ 58,178 |
Reconciliation of GAAP diluted shares
to Non-GAAP diluted shares |
|
|
|
|
GAAP diluted shares |
820,435 |
771,533 |
799,794 |
741,177 |
Other dilutive equity awards (1) |
-- |
49,964 |
-- |
88,155 |
Non-GAAP diluted shares |
820,435 |
821,497 |
799,794 |
829,332 |
Non-GAAP net income per
share: |
$ (0.03) |
$ 0.01 |
$ (0.04) |
$ 0.07 |
Reconciliation of Cash provided by
operating activities to Free cash flow |
|
|
|
|
Net cash provided by operating
activities |
7,732 |
19,779 |
28,674 |
195,767 |
Acquisition of property and equipment |
(469) |
(6,250) |
(7,813) |
(98,054) |
Purchase of building |
-- |
-- |
-- |
(233,700) |
Excess tax benefits from stock-based
awards |
(452) |
15,972 |
(11,244) |
21,652 |
Free cash flow |
$ 6,811 |
$ 29,501 |
$ 9,617 |
$ (114,335) |
Reconciliation of GAAP to Non-GAAP
provision for (benefit from) income taxes |
|
|
|
|
GAAP provision for (benefit from) income
taxes |
(241) |
86,290 |
(27,887) |
49,873 |
Net gain on termination of lease and purchase
of building |
-- |
-- |
-- |
(10,679) |
Stock-based expense |
(798) |
22,274 |
2,768 |
104,196 |
Amortization of intangible assets from
acquisitions |
5 |
4,955 |
539 |
18,938 |
Acquisition-related contingent
consideration |
345 |
-- |
345 |
-- |
Impairment of intangible assets |
-- |
-- |
2,043 |
37,867 |
Change in deferred revenue |
(5,318) |
(51,042) |
(17,634) |
(90,901) |
Restructuring expense |
22 |
972 |
2,504 |
972 |
Legal settlements |
-- |
1,176 |
-- |
1,671 |
Other |
-- |
(55,008) |
-- |
(55,008) |
Non-GAAP provision for (benefit from)
income taxes |
$ (5,985) |
$ 9,617 |
$ (37,322) |
$ 56,929 |
|
|
|
|
|
(1) Gives effect to all
dilutive awards based on the treasury stock method. |
|
ZYNGA
INC. |
RECONCILIATION OF GAAP
TO NON-GAAP FIRST QUARTER 2014 OUTLOOK |
(In thousands, except
per share data, unaudited) |
|
|
|
|
|
|
|
First Quarter
2014 |
Reconciliation of Revenue to
Bookings |
|
Revenue range |
$ 155,000 – 165,000 |
Change in deferred revenue |
(17,000) |
Bookings range |
$ 138,000 – 148,000 |
|
|
Reconciliation of Net loss to
Adjusted EBITDA |
|
Net loss range |
$ (56,000) – (49,000) |
Income tax expense |
1,000 |
Other income, net |
(1,000) |
Interest income |
(1,000) |
Restructuring expense |
17,000 – 15,000 |
Depreciation and amortization |
30,000 |
Stock-based expense |
25,000 |
Acquisition-related transaction expenses |
7,000 |
Change in deferred revenue |
(17,000) |
Adjusted EBITDA range |
$ 5,000 – 10,000 |
|
|
Reconciliation of Net loss to
Non-GAAP Net Loss |
|
Net loss range |
$ (56,000) – (49,000) |
Stock-based expense |
25,000 |
Amortization of intangible assets from
acquisitions |
8,000 |
Restructuring expense |
17,000 – 15,000 |
Acquisition-related transaction expenses |
7,000 |
Change in deferred revenue |
(17,000) |
Tax effect of non-GAAP adjustments to net
loss |
6,000 – 5,000 |
Non-GAAP net income (loss)
range |
$ (10,000) – (6,000) |
|
|
GAAP and Non-GAAP diluted
shares |
860,000 |
|
|
Net income (loss) per share
range |
$ (0.07) – (0.06) |
Non-GAAP net income (loss) per
share |
$ (0.01) |
CONTACT: Investors - Darren Yip
415-339-5266
investors@zynga.com
Press - Stephanie Hess
415-503-0303
press@zynga.com
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