DELIVERS $176M IN BOOKINGS AND $12M IN ADJUSTED
EBITDA
Zynga Inc. (NASDAQ:ZNGA), a leading social game developer, today
announced financial results for the third quarter ended September
30, 2015. In addition to today’s press release, a copy of our Q3
2015 Quarterly Earnings Letter, which outlines our Q3 2015
financial results and business outlook, is available on our website
at http://investor.zynga.com.
Zynga management will host a live Q&A session at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern Time) today, November 3, to discuss
the Company's Q3 performance and business outlook. Questions may be
asked on the call or submitted in advance via email to
investors@zynga.com, and the company will respond to as many
questions as possible.
“Our teams delivered a strong Q3 driven by the performance by
Wizard of Oz Slots, Words With Friends and our newly launched
Empires & Allies. We generated $176 million in total bookings
and $12 million in Adjusted EBITDA, well above the top end of our
guidance range. This growth was driven by our three core mobile
franchises Slots, Words With Friends and Poker, which grew 61%
year-over-year. These results reflect the progress we continue to
make in mobile where bookings have grown 26% versus the prior year
and now make up 69% of our total bookings, up from 66% in Q2. We
also continue to improve monetization and in Q3, we saw average
bookings per user (ABPU) grow 27% year-over-year and 10%
sequentially. Today, we also announced a $200 million stock buyback
program. Given our belief in the social gaming opportunity, our
talent and our IP, we believe this is in our shareholders’
interests,” said Mark Pincus, CEO and Founder.
“Based on the opportunity we see for Dawn of Titans and CSR2 we
have made the deliberate decision to invest in future development
of these games and move their launches into 2016. As we get closer
to our players behavior over time, we believe there are a few key
areas that we can optimize to increase long-term player retention.
For Dawn of Titans specifically, given how strong the early
monetization is for the game, we believe that a move of 200 basis
points in day 30 retention has the potential to make the game a
breakout hit. We are able to make these hard decisions, because of
the cost reduction program that we put in place earlier this year,”
said Pincus.
Financial Highlights
- Bookings of $176 million; above the high end of the guidance
range, flat year-over-year and up 1% sequentially.
- Mobile bookings are $121 million or 69% of overall bookings, up
26% year-over-year and up 6% sequentially.
- Adjusted EBITDA of $12 million; above the high end of the
guidance range.
- Advertising and other bookings up 39% year-over-year and 17%
sequentially.
- Non-GAAP operating expenses decreased to $114 million, a 9%
sequential decrease.
- $1.1 billion in cash, cash equivalents and marketable
securities.
- Announcing $200 million share repurchase program.
Product Updates
- Slots – Recently acquired Rising Tide Games and launched Black
Diamond Casino worldwide. Princess Bride Slots to launch worldwide
in Q4.
- Words With Friends – Grew bookings by 28% sequentially and 34%
year-over-year despite audience decline.
- Empires & Allies – Overall performance has been below our
expectations but monetization remains strong.
- Dawn of Titans – Launch moved into 2016; continue to see great
potential with an average Apple App Store rating of 4.5 stars.
Encouraging initial monetization; ABPU among the highest we’ve seen
in a Zynga game.
- CSR2 – Launched moved to next year; entered into geo-lock
testing in 7 markets with an average Apple App Store rating of 4.6
stars. Monetization has been promising during early, initial phases
of testing.
Announces Share Repurchase Program
Today, the company announced that our Board of Directors
authorized a share repurchase program of up to $200 million of our
outstanding Class A common stock that remains in effect until
October 2017. The timing and amount of any stock repurchases will
be determined based on market conditions, share price and other
factors. The program does not require us to repurchase any specific
number of shares of our Class A common stock, and may be
modified, suspended or terminated at any time without notice. The
stock repurchase program will be funded from existing cash on hand.
In connection with the share repurchase program, the Company may
adopt one or more plans pursuant to the provisions of Rule 10b5-1
under the Securities Exchange Act of 1934. Share repurchases under
these authorizations may be made through a variety of methods,
which may include open market purchases, privately negotiated
transactions, block trades, accelerated share repurchase
transactions, or by any combination of such methods. Repurchases of
our Class A common stock in the open market could result in
increased volatility in our stock price.
Announces Resignation of CFO David Lee & Interim CFO
Appointment of CAO Michelle Quejado
Zynga announced today that its Chief Financial Officer David Lee
is resigning as CFO effective immediately and departing the company
on December 11, 2015. Zynga has initiated a search for a permanent
CFO and until a new CFO is appointed, Michelle Quejado, Zynga’s
Chief Accounting Officer, will serve as interim CFO effective
immediately. Quejado will be working with Lee, as well as Zynga CEO
Mark Pincus, over the next month to ensure a seamless transition of
responsibilities.
“I want to thank David for the leadership and commitment he has
shown Zynga,” said Pincus. “Over the past six months, David and I
have partnered on a number of key initiatives to strengthen the
company’s long-term position. This has included our $100 million
cost reduction program, our continued transition to mobile and,
most recently, our $200 million stock buyback program. David will
stay on until mid-December to manage the transition and work with
our newly appointed interim CFO, Michelle Quejado, Zynga’s Chief
Accounting Officer.”
“I believe Zynga is in a much stronger position today than it
was when I joined the company, and I want to thank Mark for his
partnership. We’ve moved the majority of our business to mobile and
are focused on growing our new IP and existing franchises, while
significantly reducing our cost structure,” said David Lee. “I’m
proud of what our teams have accomplished and know that they, along
with our interim CFO Michelle Quejado, will continue to focus on
delivering long-term value for our shareholders while executing
against our mission to connect the world though games.”
Quejado brings with her more than 25 years of experience, and
has deep expertise in accounting, financial planning and analysis,
and project and people management. She joined Zynga in March 2015
as Vice President of Finance and Corporate Controller, and in June
was appointed as Zynga’s Chief Accounting Officer.
Prior to joining Zynga, Quejado held various financial roles at
Lam Research Corporation, a multinational semiconductor company,
between 1999 and 2015, most recently serving as its Assistant
Corporate Controller. Before joining Lam Research Corporation,
Quejado was as an auditor for the United States Department of
Defense from 1989 through 1998. Quejado is a Certified Public
Accountant and holds a B.S. degree in Accounting from the
University of Southern Oregon.
Financial Highlights (in thousands, except per
share data) |
|
|
|
|
|
Three Months Ended |
|
|
September 30, 2015 |
|
June 30, 2015 |
|
September 30, 2014 |
GAAP
Results |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
195,737 |
|
$ |
|
199,918 |
|
|
$ |
|
176,611 |
|
Net income (loss) |
|
$ |
3,052 |
|
$ |
|
(26,868 |
) |
|
$ |
|
(57,058 |
) |
Diluted net income
(loss) per share |
|
$ |
0.00 |
|
$ |
|
(0.03 |
) |
|
$ |
|
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Results |
|
|
|
|
|
|
|
|
|
Bookings |
|
$ |
175,979 |
|
$ |
|
174,462 |
|
|
$ |
|
175,488 |
|
Adjusted EBITDA |
|
$ |
12,415 |
|
$ |
|
963 |
|
|
$ |
|
2,163 |
|
Non-GAAP net income
(loss) |
|
$ |
3,681 |
|
$ |
|
(7,578 |
) |
|
$ |
|
(6,681 |
) |
Non-GAAP earnings
(loss) per share |
|
$ |
0.00 |
|
$ |
|
(0.01 |
) |
|
$ |
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
Player Metrics (users and payers in
millions)
The company tracks operating metrics using internal systems
which rely on internal company data and third party data. We rely
on the veracity of data provided by individuals and reported by
third parties to calculate our metrics and reduce duplication of
data. In the first quarter of 2015, the company modified its
calculations to take into account our business's transition to
mobile and updates to our operating metrics which utilize
additional third party data to help us identify whether a player
logged in under two or more accounts is the same individual. As a
result of these changes, we revised the definitions for DAUs, MAUs,
MUUs, and MUPs in the first quarter of 2015. In the third quarter
of 2015, the company made a subsequent modification to its
calculations of MUU to further reduce duplication of users of both
web and mobile platforms and to correct an error in calculating the
third quarter of 2014 MUU which resulted in MUU for that period to
be understated by 0.3 million users. For comparative purposes, all
of these key operating metrics have been revised for the third
quarter of 2014 and MUU for the second quarter of 2015 to reflect
the company’s current definitions and calculations for all periods
presented. Please refer to our Quarterly Report on Form 10-Q
for the quarters ended March 31, 2015 and June 30, 2015 and, when
filed, our Quarterly report on Form 10-Q for the quarter ended
September 30, 2015 (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) for a full explanation of the
changes and the comparison of the revised and as reported numbers
for 2014 and 2015.
|
Three Months Ended |
|
|
|
|
|
|
September 30, 2015 |
|
June 30, 2015 |
|
September 30, 2014 |
|
Q3'15 Q/Q |
|
Q3'15 Y/Y |
|
Average daily active
users (DAUs) |
|
|
19 |
|
|
|
|
21 |
|
|
|
|
24 |
|
|
|
(9 |
%) |
|
|
(21 |
%) |
|
Average mobile
DAUs |
|
|
16 |
|
|
|
|
17 |
|
|
|
|
16 |
|
|
|
(5 |
%) |
|
|
(5 |
%) |
|
Average web DAUs |
|
|
3 |
|
|
|
|
4 |
|
|
|
|
8 |
|
|
|
(22 |
%) |
|
|
(55 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average monthly active
users (MAUs) |
|
|
75 |
|
|
|
|
83 |
|
|
|
|
103 |
|
|
|
(9 |
%) |
|
|
(27 |
%) |
|
Average mobile
MAUs |
|
|
61 |
|
|
|
|
64 |
|
|
|
|
65 |
|
|
|
(5 |
%) |
|
|
(6 |
%) |
|
Average web MAUs |
|
|
14 |
|
|
|
|
19 |
|
|
|
|
38 |
|
|
|
(23 |
%) |
|
|
(63 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily bookings
per average DAU (ABPU) |
$ |
|
0.100 |
|
|
$ |
|
0.091 |
|
|
$ |
|
0.079 |
|
|
|
10 |
% |
|
|
27 |
% |
|
Average monthly unique
users (MUUs) (1) |
|
|
51 |
|
|
|
|
60 |
|
|
|
|
66 |
|
|
|
(15 |
%) |
|
|
(23 |
%) |
|
Average monthly unique
payers (MUPs) (1) |
|
|
0.9 |
|
|
|
|
1.0 |
|
|
|
|
1.2 |
|
|
|
(9 |
%) |
|
|
(24 |
%) |
|
Payer conversion
(1) |
|
|
1.7 |
% |
|
|
|
1.6 |
% |
|
|
|
1.8 |
% |
|
|
6 |
% |
|
|
(2 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) MUUs,
MUPs and payer conversion exclude NaturalMotion legacy games (CSR
Racing, CSR Classics and Clumsy Ninja) as our systems are unable to
distinguish whether a player of a NaturalMotion legacy game is also
a player of a Zynga game. We exclude players of NaturalMotion
legacy games to avoid potential duplication of users. |
Third Quarter 2015 Financial Summary
- Revenue: Revenue was $196 million for the
third quarter of 2015, a decrease of 2% compared to the second
quarter of 2015 and an increase of 11% compared to the third
quarter of 2014. Online game revenue was $151 million, a decrease
of 7% compared to the second quarter of 2015 and an increase of 8%
compared to the third quarter of 2014. Advertising and other
revenue was $45 million, an increase of 18% compared to the second
quarter of 2015 and an increase of 20% compared to the third
quarter of 2014. Farmville 2, Zynga Poker, Hit It Rich! Slots,
FarmVille 2: Country Escape and Wizard of Oz Slots accounted for
21%, 17%, 16%, 14% and 12% of online game revenue, respectively,
for the third quarter of 2015 compared to FarmVille 2, Zynga Poker,
FarmVille 2: Country Escape, Hit it Rich! Slots and Wizard of Oz
Slots accounted for 18%, 18%, 16%, 16%, and 10% of online game
revenue, respectively, for the second quarter of 2015.
- Bookings: Bookings were $176 million for the
third quarter of 2015, an increase of 1% compared to the second
quarter of 2015 and flat compared to the third quarter of
2014.
- Net income (loss): Net income was $3 million
for the third quarter of 2015, compared to net loss of $27 million
for the second quarter of 2015 and compared to net loss of $57
million for the third quarter of 2014. The increase in net income
was primarily due to lower costs and expenses (primarily
headcount-related costs, third party consulting costs, depreciation
and amortization expense and restructuring expense) as well as a
tax benefit recorded in the third quarter of 2015 related to
purchasing accounting associated with our acquisition of Rising
Tide Games.
- Adjusted EBITDA: Adjusted EBITDA was $12
million for the third quarter of 2015, compared to $1 million in
the second quarter of 2015 and $2 million for the third quarter of
2014. The increase in adjusted EBITDA was primarily due to lower
headcount-related costs and third party consulting costs.
- Non-GAAP net income (loss): Non-GAAP net
income was $4 million for the third quarter of 2015, compared to
non-GAAP net loss of $8 million in the second quarter of 2015 and a
non-GAAP net loss of $7 million in the third quarter of 2014. The
change in non-GAAP net income (loss) was primarily due to lower
headcount-related costs, lower third party consulting costs and
lower depreciation expense due to the consolidation of data center
facilities.
- Net income (loss) per share: Diluted net
income per share was $0.00 for the third quarter of 2015, compared
to a diluted net loss per share of $0.03 for the second quarter of
2015 and a diluted net loss per share of $0.06 for the third
quarter of 2014.
- Non-GAAP earnings (loss) per share: Non-GAAP
earnings per share was $0.00 for the third quarter of 2015,
compared to a non-GAAP net loss per share of $0.01 for the second
quarter of 2015 and a non-GAAP net loss per share of $0.01 for the
third quarter of 2014.
- Cash and cash flow: As of September 30, 2015,
cash, cash equivalents and marketable securities were approximately
$1.07 billion, compared to $1.10 billion as of June 30, 2015. Cash
flow from operations was ($5) million for the third quarter of
2015, compared to $4 million for the second quarter of 2015 and
($2) million for the third quarter of 2014. Free cash flow was ($7)
million for the third quarter of 2015, compared to $1 million for
the second quarter of 2015 and ($5) million for the third quarter
of 2014.
Fourth Quarter Outlook
Zynga’s outlook for the fourth quarter of 2015 is as
follows:
- Revenue is projected to be in the range of $170 million to $185
million
- Net loss is projected to be in the range of ($75) million to
($53) million
- Net loss per share is projected to be in the range of ($0.08)
to ($0.06) based on a share count projected to be approximately 933
million shares
- Bookings are projected to be in the range of $165 million to
$180 million
- Adjusted EBITDA is projected to be in the range of ($5) million
to $5 million
- Non-GAAP net loss per share is projected to be in the range of
($0.01) to ($0.00), based on a share count projected to be
approximately 933 million shares
Conference Call Details
In addition to today’s press release, a copy of our Q3 2015
Quarterly Earnings Letter, which outlines our third quarter 2015
financial results and business outlook, is available on our website
at http://investor.zynga.com.
Zynga will host a live Q&A session today, November 3, 2015,
at 2:00 pm PDT (5:00 pm EDT) to discuss financial results.
Questions may be asked on the call or submitted in advance via
email to investors@zynga.com, and the company will respond to as
many questions as possible.
The live Q&A session can be accessed at
http://investor.zynga.com – a replay of which will be available
through the website after the call – or via the below conference
dial-in number:
Toll-Free Dial-In Number: (800) 537-0745International Dial-In
Number: (253) 237-1142Conference ID: 57603682
About Zynga Inc. Zynga Inc. is a leading
developer of the world's most popular social games that are played
by millions of monthly consumers. The company has created evergreen
franchises such as FarmVille, Zynga Casino and Words With Friends.
Zynga's NaturalMotion, an Oxford-based mobile game and technology
developer, is the creator of hit mobile games in popular
entertainment categories, including CSR Racing, CSR Classics and
Clumsy Ninja. Zynga games have been played by more than 1 billion
people around the world and are available on a number of global
platforms including Apple iOS, Google Android, Facebook and
Zynga.com. The company is headquartered in San Francisco,
California. 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=11743Key
Operating Metrics
We manage our business by tracking several operating metrics:
"DAUs," which measure daily active users of our games, "MAUs,"
which measure monthly active users of our games, "MUUs," which
measure monthly unique users of our games, "MUPs," which measure
monthly unique payers in our games, and "ABPU," which measures our
average daily bookings per average DAU, each of which is recorded
by our internal analytics systems. The numbers for these operating
metrics are calculated using internal company data based on
tracking of user account activity. We also use third party network
logins to help us track whether a player logged under two or more
different user accounts is the same individual. We believe that the
numbers are reasonable estimates of our user base for the
applicable period of measurement; however, factors relating to user
activity and systems may impact these numbers. Please refer to our
Quarterly Report on Form 10-Q for the quarters ended March 31, 2015
and June 30, 2015 and, when filed, our Quarterly report on Form
10-Q for the quarter ended September 30, 2015 for our updated
definitions of “DAU,” “MAU,” “MUU,” “MUP” and “ABPU.”
MUUs, MUPs and payer conversion in this press release exclude
NaturalMotion legacy games (CSR Racing, CSR Classics and Clumsy
Ninja) as our systems are unable to distinguish whether a player of
a NaturalMotion legacy game is also a player of a Zynga game. We
exclude players of NaturalMotion legacy games to avoid potential
duplication.
We acquired NaturalMotion in February 2014. As a result, the
financial information presented in this press release for January
2014 and a portion of February 2014 does not reflect any
contribution from NaturalMotion.
Forward-Looking Statements This press release
contains forward-looking statements relating to, among other
things, our outlook for the fourth quarter 2015 revenue, net
loss, net loss per share, weighted average diluted share
count, bookings, Adjusted EBITDA, non-GAAP net loss per share and
non-GAAP weighted average diluted share count; certain other
financial items necessary for GAAP to Non-GAAP reconciliation; our
future operational plans, use of cash, strategies and prospects;
our cost structure; the breadth and depth of our game slate for
2015 and the success of this slate, including the success of the
recently launched Empires & Allies and Black Diamond Casino;
our continued transition to mobile; our planned launch of mobile
first games, including our planned launch of Dawn of Titans and
CSR2 in 2016; our ability to sustain player engagement, optimize to
increase long-term player retention and monetize our live games
(including our Slots games, Words With Friends and Empires &
Allies) and games in geo-lock testing, (including, Dawn of Titans
and CSR2); our ability to grow our mobile bookings in 2015 and
beyond; our ability to execute against our strategy and deliver
long-term value to our shareholders, employees and players and
fulfill our mission to connect the world through games; our ability
to attract and retain key employees in light of business
challenges, including employees key to franchise games and planned
launches and senior management; the impact of changes in
management, new hires and other organizational changes and roles on
our organization; the strength of our balance sheet and our ability
to effectively manage our cost structure and investments; the
timely launch and success of our games, including the moved launch
of Dawn of Titans and CSR2 to 2016; the success of our acquisition
of Rising Tide Games,; our ability to improve our execution against
audience growth and product quality; our ability to effectively
market our games; our ability to execute in mobile; our ability to
sustain and expand key games to sustain and grow audiences,
bookings, and engagement, including games within our Slots
Franchise (Hit It Rich! Slots, Wizard of Oz Slots and Black Diamond
Casino), Words with Friends, Zynga Poker, FarmVille 2, FarmVille 2:
Country Escape and Empires & Allies); investment in new game
development, marketing for live games and new game launches and
core infrastructure in data and analytics; our ability to build on
our social legacy in both our web games and our new mobile games
and build a player network across mobile games; our ability to
accurately forecast our upcoming game launches and bookings and
revenue related to upcoming game launches and the performance of
our existing games; our ability to operate in an entrepreneurial
manner, innovate on game mechanics, and leverage data and analytics
in our operations; our ability to utilize, protect, defend and
enforce our intellectual property; market opportunity in the social
gaming market, including the mobile market, the advertising market,
the market for social game categories in which we invest, and our
ability to capitalize on and contribute to this market opportunity;
and the announced share repurchase program and any potential
repurchases of our shares.
Forward-looking statements often include words such as
“outlook,” “project,” “plan,” “intend,” “could,” “should,” “would,”
“will,” “might,” “anticipate,” “estimate,” “continue,” “believe,”
“may,” “target,” “expect,” or similar expressions, or the negative
or plural of these words or expressions and statements in the
future tense are generally forward-looking. The achievement or
success of the matters covered by such forward-looking statements
is subject to a number of risks, uncertainties, and assumptions.
Moreover, we operate in a very competitive and rapidly changing
environment and industry. New risks may also emerge from time to
time. It is not possible for our management to predict all of the
risks related to our business and operations, nor can we assess the
impact of all factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements we may make 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, the ability of key games, including our franchise
games, to sustain or grow audiences, bookings and engagement; our
relationship with Facebook, changes in the Facebook platform and/or
changes in our agreement with Facebook; our relationship with
Apple, Google and other Android platform providers, changes in the
Android or iOS platforms and/or changes in our agreements with
Apple, Google and/or other Android platform providers; our
relationship and/or agreements with key licensing partners,
additional platform providers or any key partners; the
effectiveness of our cost-cutting activities and our ability to
control and reduce expenses, including our estimated savings and
charges associated with our restructuring efforts; our ability to
efficiently deploy employees, leverage our teams and talent,
including shifting resources when necessary to prioritize more
important projects; our ability to retain and attract new talent;
our ability to work as a team to execute against our strategy; our
use of working capital in general; attrition or decline in existing
games, including franchise games; our ability to launch and
monetize successfully new games and features for web and mobile in
a timely manner (such as the Leagues feature in Empires &
Allies) and the success of these games and features, including
planned features for our existing games; the process of integrating
our operations into NaturalMotion Limited’s (“NaturalMotion’s”) and
Rising Tide Games, Inc.’s (“Rising Tide Games”) operations and
NaturalMotion’s and Rising Tide Games’s operations into our
operations, including but not limited to our expected ability to
expand our creative pipeline, accelerate our growth on mobile and
deliver hit NaturalMotion games in 2016 and hit games from Rising
Tide Games; planned launches from our franchises and planned
launches in the content categories where we are focused; the
ability of our games to generate revenue and bookings for a
significant period of time after launch and the timing for market
acceptance of new games; the effectiveness of our marketing program
and initiatives and our ability to obtain game featuring from
partners; our ability to understand industry trends, such as
seasonality, and position our business to take advantage of these
trends; our ability to successfully monitor and adapt to changes in
gaming platform and consumer demand as the industry continues to
evolve; our ability to run successful in game advertising
campaigns; our exposure to illegitimate credit card activity and
other security risks, including sales or purchases of virtual goods
used in our games through unauthorized or illegitimate third-party
websites; our ability to anticipate and address technical
challenges that may arise; our ability to protect our players’
information and adequately address privacy concerns; our ability to
maintain technology infrastructure and employees that can
efficiently and reliably handle increased player usage, changes in
mobile devices and game platforms, fast load times and the rapid
deployment of new features and products; our ability to maintain
reliable security services and infrastructure to protect against
security breaches, computer malware and hacking attacks;
competition in our industry; changing interests of players; our
exposure to intellectual property disputes and other litigation;
asset impairment charges; our evaluation of new business
opportunities and acquisitions by us, including integration of
newly acquired businesses; our future spend, including spend on
R&D and marketing and our future margins; our ability to renew
our existing brand, technology and content licenses as they expire
and secure new licenses for top brands; our ability to manage
risks, costs and other challenges associated with international
expansion; the impact of laws and regulations on our business;
changes in corporate strategy or management; our search for a Chief
Financial Officer; and risks related to our share repurchase
program and any repurchases of our shares, including that the
timing and amount of any stock repurchases that will be determined
based on market conditions, share price and other factors, that the
program does not require us to repurchase any specific number of
shares of our Class A common stock, and may be modified,
suspended or terminated at any time without notice, that the stock
repurchase program will be funded from existing cash on hand, the
fact that the Company may adopt one or more plans pursuant to the
provisions of Rule 10b5-1 under the Securities Exchange Act of 1934
in connection with the repurchase program and any share repurchases
may be made through a variety of methods, which may include open
market purchases, privately negotiated transactions, block trades,
accelerated share repurchase transactions, or by any combination of
such methods, and that repurchases of our Class A common
stock in the open market could result in increased volatility in
our stock price.
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 Annual Report on Form 10-K for the
year ended December 31, 2014, our Quarterly report on Form 10-Q for
the three months ended June 30, 2015, and, when filed, our
Quarterly report on Form 10-Q for the three months ended September
30, 2015, 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 press 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. Except as required by law, we assume no
obligation to update any forward-looking statements for any reason
to conform these statements to actual results or to changes in our
expectations. The results we report in our Quarterly Report on Form
10-Q for the quarter ended September 30, 2015 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, non-GAAP net loss, non-GAAP
operating expense, free cash flow, non-GAAP provision for (benefit
from) income taxes, and non-GAAP net loss per share, as a
supplement to the consolidated financial statements, which are
prepared in accordance with United States 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. In
line with our historical practice, the financial information
presented herein is provided on a supplemental, non-GAAP basis
unless otherwise indicated. We have provided reconciliations
between our historical and fourth quarter 2015 outlook for non-GAAP
financial measures to the most directly comparable GAAP financial
measures. Reconciliations of non-GAAP financial measures to the
most recent directly comparable GAAP financial measures for the
third quarter 2015 may be found (1) in this press release
announcing third quarter 2015 financial results which is included
as Exhibit 99.1 to our current report on Form 8-K , filed with the
Securities and Exchange Commission on November 3, 2015, and, when
filed, in our Quarterly Report on Form 10-Q for the three months
ended September 30, 2015, 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, and
(2) in our third quarter 2015 earnings slides presentation,
dated November 3, 2015, a copy of which may be obtained by visiting
our Investor Relations web site at http://investor.zynga.com.
Some limitations of bookings, Adjusted EBITDA, non-GAAP net
loss, non-GAAP operating expense, free cash flow, non-GAAP
provision for (benefit from) income taxes, and non-GAAP net loss
per share:
- Adjusted EBITDA, non-GAAP operating expense, non-GAAP net loss
and non-GAAP provision for (benefit from) expense do not include
the impact of stock-based expense, impairment of intangible assets
previously acquired, acquisition-related transaction expenses,
contingent consideration fair value adjustments and restructuring
expense;
- Total Bookings, Adjusted EBITDA, non-GAAP net loss and non-GAAP
provision for (benefit from) expense do not reflect that we defer
and recognize online game revenue and revenue from certain
advertising transactions over the estimated average life of durable
virtual goods or as virtual goods are consumed;
- Adjusted EBITDA does not reflect income tax expense and does
not include other income (expense) net, which includes foreign
exchange gains and losses and interest income;
- Adjusted EBITDA and non-GAAP operating expense excludes
depreciation and amortization of intangible assets, while non-GAAP
net loss 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;
- Non-GAAP net loss per share gives effect to all dilutive awards
based on the treasury stock method that were excluded from the GAAP
diluted earnings per share calculation in periods when non-GAAP net
income (loss) is positive and GAAP net income (loss) is negative;
- Free cash flow is derived from net cash provided by operating
activities less cash spent on capital expenditures and
acquisitions, 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 loss, non-GAAP
operating expense, free cash flow, non-GAAP provision for (benefit
from) income taxes, and non-GAAP net loss per share 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 operating
expense, free cash flow, non-GAAP provision for (benefit from)
income taxes, and non-GAAP net income (loss) per share, along with
other financial performance measures, including revenue, net income
(loss), diluted net loss per share, cash flow from operations, GAAP
operating expense, GAAP operating margin and our other financial
results presented in accordance with GAAP. See the GAAP to non-GAAP
reconciliations below and in the places listed above for further
details.
ZYNGA INC. |
CONSOLIDATED BALANCE SHEETS |
(In thousands, unaudited) |
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2015 |
|
2014 |
Assets |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash
equivalents |
$ |
|
663,020 |
|
|
$ |
|
131,303 |
|
Marketable
securities |
|
|
406,701 |
|
|
|
|
785,221 |
|
Accounts
receivable |
|
|
87,214 |
|
|
|
|
89,611 |
|
Income tax
receivable |
|
|
5,016 |
|
|
|
|
3,304 |
|
Deferred tax
assets |
|
|
520 |
|
|
|
|
2,765 |
|
Restricted
cash |
|
|
210 |
|
|
|
|
48,047 |
|
Other current
assets |
|
|
31,475 |
|
|
|
|
22,688 |
|
Total
current assets |
|
|
1,194,156 |
|
|
|
|
1,082,939 |
|
|
|
|
|
|
|
|
Long-term
marketable securities |
|
|
4,515 |
|
|
|
|
231,385 |
|
Goodwill |
|
|
667,195 |
|
|
|
|
650,778 |
|
Other
intangible assets, net |
|
|
72,497 |
|
|
|
|
66,861 |
|
Property
and equipment, net |
|
|
280,535 |
|
|
|
|
297,919 |
|
Long-term
restricted cash |
|
|
1,000 |
|
|
|
|
- |
|
Other
long-term assets |
|
|
17,886 |
|
|
|
|
18,911 |
|
Total
assets |
$ |
|
2,237,784 |
|
|
$ |
|
2,348,793 |
|
|
|
|
|
|
|
|
Liabilities
and stockholders’ equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
|
27,507 |
|
|
$ |
|
14,965 |
|
Other current
liabilities |
|
|
59,541 |
|
|
|
|
164,150 |
|
Deferred
revenue |
|
|
132,510 |
|
|
|
|
189,923 |
|
Total
current liabilities |
|
|
219,558 |
|
|
|
|
369,038 |
|
|
|
|
|
|
|
|
Deferred
revenue |
|
|
198 |
|
|
|
|
3,882 |
|
Deferred
tax liabilities |
|
|
6,592 |
|
|
|
|
5,323 |
|
Other
non-current liabilities |
|
|
91,007 |
|
|
|
|
74,858 |
|
Total
liabilities |
|
|
317,355 |
|
|
|
|
453,101 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
Common
stock and additional paid in capital |
|
|
3,206,629 |
|
|
|
|
3,096,982 |
|
Accumulated
other comprehensive income (loss) |
|
|
(41,414 |
) |
|
|
|
(29,175 |
) |
Accumulated
deficit |
|
|
(1,244,786 |
) |
|
|
|
(1,172,115 |
) |
Total
stockholders’ equity |
|
|
1,920,429 |
|
|
|
|
1,895,692 |
|
Total
liabilities and stockholders’ equity |
$ |
|
2,237,784 |
|
|
$ |
|
2,348,793 |
|
|
|
|
|
|
|
|
ZYNGA INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share data,
unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, 2015 |
|
June 30, 2015 |
|
September 30, 2014 |
|
September 30, 2015 |
|
September 30, 2014 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online game |
$ |
|
151,168 |
|
|
$ |
|
162,161 |
|
|
$ |
|
139,372 |
|
|
$ |
|
461,292 |
|
|
$ |
|
402,608 |
|
Advertising and
other |
|
|
44,569 |
|
|
|
|
37,757 |
|
|
|
|
37,239 |
|
|
|
|
117,656 |
|
|
|
|
95,255 |
|
Total
revenue |
|
|
195,737 |
|
|
|
|
199,918 |
|
|
|
|
176,611 |
|
|
|
|
578,948 |
|
|
|
|
497,863 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
|
|
57,187 |
|
|
|
|
57,779 |
|
|
|
|
53,286 |
|
|
|
|
172,588 |
|
|
|
|
158,078 |
|
Research and
development |
|
|
78,416 |
|
|
|
|
90,896 |
|
|
|
|
100,113 |
|
|
|
|
276,832 |
|
|
|
|
291,419 |
|
Sales and
marketing |
|
|
43,549 |
|
|
|
|
41,119 |
|
|
|
|
44,005 |
|
|
|
|
116,507 |
|
|
|
|
115,466 |
|
General and
administrative |
|
|
25,765 |
|
|
|
|
37,805 |
|
|
|
|
38,536 |
|
|
|
|
103,951 |
|
|
|
|
128,703 |
|
Total costs
and expenses |
|
|
204,917 |
|
|
|
|
227,599 |
|
|
|
|
235,940 |
|
|
|
|
669,878 |
|
|
|
|
693,666 |
|
Income
(loss) from operations |
|
|
(9,180 |
) |
|
|
|
(27,681 |
) |
|
|
|
(59,329 |
) |
|
|
|
(90,930 |
) |
|
|
|
(195,803 |
) |
Interest
income (expense), net |
|
|
566 |
|
|
|
|
605 |
|
|
|
|
841 |
|
|
|
|
1,965 |
|
|
|
|
2,487 |
|
Other
income (expense), net |
|
|
2,285 |
|
|
|
|
1,199 |
|
|
|
|
647 |
|
|
|
|
11,843 |
|
|
|
|
2,668 |
|
Income
(loss) before income taxes |
|
|
(6,329 |
) |
|
|
|
(25,877 |
) |
|
|
|
(57,841 |
) |
|
|
|
(77,122 |
) |
|
|
|
(190,648 |
) |
Provision
for (benefit from) income taxes |
|
|
(9,381 |
) |
|
|
|
991 |
|
|
|
|
(783 |
) |
|
|
|
(6,810 |
) |
|
|
|
(9,874 |
) |
Net income
(loss) |
$ |
|
3,052 |
|
|
$ |
|
(26,868 |
) |
|
$ |
|
(57,058 |
) |
|
$ |
|
(70,312 |
) |
|
$ |
|
(180,774 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
|
0.00 |
|
|
$ |
|
(0.03 |
) |
|
$ |
|
(0.06 |
) |
|
$ |
|
(0.08 |
) |
|
$ |
|
(0.21 |
) |
Diluted |
$ |
|
0.00 |
|
|
$ |
|
(0.03 |
) |
|
$ |
|
(0.06 |
) |
|
$ |
|
(0.08 |
) |
|
$ |
|
(0.21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares used to compute net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
921,116 |
|
|
|
|
911,699 |
|
|
|
|
884,021 |
|
|
|
|
910,469 |
|
|
|
|
869,178 |
|
Diluted |
|
|
940,032 |
|
|
|
|
911,699 |
|
|
|
|
884,021 |
|
|
|
|
910,469 |
|
|
|
|
869,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
expense included in the above line items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
$ |
|
991 |
|
|
$ |
|
772 |
|
|
$ |
|
1,110 |
|
|
$ |
|
2,835 |
|
|
$ |
|
3,391 |
|
Research and
development |
|
|
22,308 |
|
|
|
|
19,860 |
|
|
|
|
24,281 |
|
|
|
|
70,485 |
|
|
|
|
60,293 |
|
Sales and
marketing |
|
|
2,045 |
|
|
|
|
1,617 |
|
|
|
|
1,187 |
|
|
|
|
5,181 |
|
|
|
|
4,505 |
|
General and
administrative |
|
|
5,092 |
|
|
|
|
5,656 |
|
|
|
|
9,717 |
|
|
|
|
21,302 |
|
|
|
|
25,279 |
|
Total stock-based
expense |
$ |
|
30,436 |
|
|
$ |
|
27,905 |
|
|
$ |
|
36,295 |
|
|
$ |
|
99,803 |
|
|
$ |
|
93,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, 2015 |
|
June 30, 2015 |
|
September 30, 2014 |
|
September 30, 2015 |
|
September 30, 2014 |
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
$ |
|
3,052 |
|
|
$ |
|
(26,868 |
) |
|
$ |
|
(57,058 |
) |
|
$ |
|
(70,312 |
) |
|
$ |
|
(180,774 |
) |
Adjustments
to reconcile net income (loss) to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
11,287 |
|
|
|
|
13,340 |
|
|
|
|
19,283 |
|
|
|
|
42,349 |
|
|
|
|
64,553 |
|
Stock-based
expense |
|
|
30,436 |
|
|
|
|
27,905 |
|
|
|
|
36,295 |
|
|
|
|
99,803 |
|
|
|
|
93,468 |
|
Accretion and
amortization on marketable securities |
|
|
1,057 |
|
|
|
|
1,797 |
|
|
|
|
2,385 |
|
|
|
|
4,941 |
|
|
|
|
7,783 |
|
(Gain) loss from
sales of investments, assets and other, net |
|
|
(633 |
) |
|
|
|
406 |
|
|
|
|
853 |
|
|
|
|
(6,283 |
) |
|
|
|
2,131 |
|
Tax benefits
(costs) from stock-based awards |
|
|
90 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
90 |
|
|
|
|
- |
|
Excess tax
benefits from stock-based awards |
|
|
(90 |
) |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
(90 |
) |
|
|
|
- |
|
Deferred income
taxes |
|
|
(10,392 |
) |
|
|
|
243 |
|
|
|
|
(1,038 |
) |
|
|
|
(9,151 |
) |
|
|
|
(10,113 |
) |
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable, net |
|
|
(4,313 |
) |
|
|
|
(3,233 |
) |
|
|
|
(2,560 |
) |
|
|
|
2,544 |
|
|
|
|
(13,443 |
) |
Income tax
receivable |
|
|
(183 |
) |
|
|
|
(331 |
) |
|
|
|
4,478 |
|
|
|
|
(1,712 |
) |
|
|
|
3,200 |
|
Other assets |
|
|
(3,068 |
) |
|
|
|
(1,105 |
) |
|
|
|
4,032 |
|
|
|
|
(11,860 |
) |
|
|
|
(3,860 |
) |
Accounts
payable |
|
|
(536 |
) |
|
|
|
11,699 |
|
|
|
|
(7,503 |
) |
|
|
|
12,226 |
|
|
|
|
(5,919 |
) |
Deferred
revenue |
|
|
(19,757 |
) |
|
|
|
(25,457 |
) |
|
|
|
(1,123 |
) |
|
|
|
(61,097 |
) |
|
|
|
13,838 |
|
Other
liabilities |
|
|
(12,062 |
) |
|
|
|
5,806 |
|
|
|
|
(460 |
) |
|
|
|
(49,360 |
) |
|
|
|
20,280 |
|
Net cash
provided by (used in) operating activities |
|
|
(5,112 |
) |
|
|
|
4,202 |
|
|
|
|
(2,416 |
) |
|
|
|
(47,912 |
) |
|
|
|
(8,856 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of
marketable securities |
|
|
- |
|
|
|
|
- |
|
|
|
|
(147,082 |
) |
|
|
|
(101,091 |
) |
|
|
|
(617,256 |
) |
Sales and
maturities of marketable securities |
|
|
211,350 |
|
|
|
|
256,112 |
|
|
|
|
141,286 |
|
|
|
|
702,017 |
|
|
|
|
667,706 |
|
Acquisition
of property and equipment |
|
|
(1,608 |
) |
|
|
|
(3,127 |
) |
|
|
|
(2,429 |
) |
|
|
|
(6,847 |
) |
|
|
|
(7,078 |
) |
Proceeds
from sale of property and equipment |
|
|
750 |
|
|
|
|
- |
|
|
|
|
3 |
|
|
|
|
750 |
|
|
|
|
5,059 |
|
Business
acquisition, net of cash acquired |
|
|
(20,023 |
) |
|
|
|
- |
|
|
|
|
(718 |
) |
|
|
|
(20,023 |
) |
|
|
|
(391,711 |
) |
Proceeds
from sale of equity method investment |
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
10,507 |
|
|
|
|
- |
|
Other
investing activities, net |
|
|
- |
|
|
|
|
- |
|
|
|
|
(343 |
) |
|
|
|
- |
|
|
|
|
357 |
|
Net cash
provided by (used in) investing activities |
|
|
190,469 |
|
|
|
|
252,985 |
|
|
|
|
(9,283 |
) |
|
|
|
585,313 |
|
|
|
|
(342,923 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes paid
related to net share settlement of equity awards |
|
|
(453 |
) |
|
|
|
(405 |
) |
|
|
|
(210 |
) |
|
|
|
(1,866 |
) |
|
|
|
(963 |
) |
Proceeds
from employee stock purchase plan and exercise of stock
options |
|
|
2,957 |
|
|
|
|
945 |
|
|
|
|
4,805 |
|
|
|
|
7,292 |
|
|
|
|
15,728 |
|
Excess tax
benefits from stock-based awards |
|
|
90 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
90 |
|
|
|
|
- |
|
Acquisition
related contingent consideration payment |
|
|
- |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
(10,790 |
) |
|
|
|
- |
|
Net cash
provided by (used in) financing activities |
|
|
2,594 |
|
|
|
|
540 |
|
|
|
|
4,595 |
|
|
|
|
(5,274 |
) |
|
|
|
14,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
|
(359 |
) |
|
|
|
246 |
|
|
|
|
(246 |
) |
|
|
|
(410 |
) |
|
|
|
(231 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents |
|
|
187,592 |
|
|
|
|
257,973 |
|
|
|
|
(7,350 |
) |
|
|
|
531,717 |
|
|
|
|
(337,245 |
) |
Cash and
cash equivalents, beginning of period |
|
|
475,428 |
|
|
|
|
217,455 |
|
|
|
|
135,628 |
|
|
|
|
131,303 |
|
|
|
|
465,523 |
|
Cash and
cash equivalents, end of period |
$ |
|
663,020 |
|
|
$ |
|
475,428 |
|
|
$ |
|
128,278 |
|
|
|
|
663,020 |
|
|
$ |
|
128,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC. |
RECONCILIATION OF GAAP TO NON-GAAP
RESULTS |
(In thousands, except per share data,
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, 2015 |
|
June 30, 2015 |
|
September 30, 2014 |
|
September 30, 2015 |
|
September 30, 2014 |
Reconciliation
of Revenue to Bookings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
|
195,737 |
|
|
$ |
|
199,918 |
|
|
$ |
|
176,611 |
|
|
$ |
|
578,948 |
|
|
$ |
|
497,863 |
|
Change in deferred
revenue |
|
|
(19,758 |
) |
|
|
|
(25,456 |
) |
|
|
|
(1,123 |
) |
|
|
|
(61,097 |
) |
|
|
|
14,085 |
|
Bookings |
$ |
|
175,979 |
|
|
$ |
|
174,462 |
|
|
$ |
|
175,488 |
|
|
$ |
|
517,851 |
|
|
$ |
|
511,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net income (loss) to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
|
3,052 |
|
|
$ |
|
(26,868 |
) |
|
$ |
|
(57,058 |
) |
|
$ |
|
(70,312 |
) |
|
$ |
|
(180,774 |
) |
Provision for (benefit
from) income taxes |
|
|
(9,381 |
) |
|
|
|
991 |
|
|
|
|
(783 |
) |
|
|
|
(6,810 |
) |
|
|
|
(9,874 |
) |
Other income (expense),
net |
|
|
(2,285 |
) |
|
|
|
(1,199 |
) |
|
|
|
(647 |
) |
|
|
|
(11,843 |
) |
|
|
|
(2,668 |
) |
Interest income
(expense), net |
|
|
(566 |
) |
|
|
|
(605 |
) |
|
|
|
(841 |
) |
|
|
|
(1,965 |
) |
|
|
|
(2,487 |
) |
Restructuring expense,
net |
|
|
416 |
|
|
|
|
12,855 |
|
|
|
|
287 |
|
|
|
|
16,732 |
|
|
|
|
27,672 |
|
Gain (loss) on legal
settlements |
|
|
(1,681 |
) |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
(1,681 |
) |
|
|
|
- |
|
Depreciation and
amortization |
|
|
11,287 |
|
|
|
|
13,340 |
|
|
|
|
19,283 |
|
|
|
|
42,349 |
|
|
|
|
64,553 |
|
Acquisition-related
transaction expenses |
|
|
895 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
895 |
|
|
|
|
6,425 |
|
Contingent
consideration fair value adjustment |
|
|
- |
|
|
|
|
- |
|
|
|
|
6,750 |
|
|
|
|
9,400 |
|
|
|
|
20,100 |
|
Stock-based
expense |
|
|
30,436 |
|
|
|
|
27,905 |
|
|
|
|
36,295 |
|
|
|
|
99,803 |
|
|
|
|
93,468 |
|
Change in deferred
revenue |
|
|
(19,758 |
) |
|
|
|
(25,456 |
) |
|
|
|
(1,123 |
) |
|
|
|
(61,097 |
) |
|
|
|
14,085 |
|
Adjusted
EBITDA |
$ |
|
12,415 |
|
|
$ |
|
963 |
|
|
$ |
|
2,163 |
|
|
$ |
|
15,471 |
|
|
$ |
|
30,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net income (loss) to Non-GAAP net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
|
3,052 |
|
|
$ |
|
(26,868 |
) |
|
$ |
|
(57,058 |
) |
|
$ |
|
(70,312 |
) |
|
$ |
|
(180,774 |
) |
Acquisition-related
transaction expenses |
|
|
895 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
895 |
|
|
|
|
6,425 |
|
Contingent
consideration fair value adjustment |
|
|
- |
|
|
|
|
- |
|
|
|
|
6,750 |
|
|
|
|
9,400 |
|
|
|
|
20,100 |
|
Stock-based
expense |
|
|
30,436 |
|
|
|
|
27,905 |
|
|
|
|
36,295 |
|
|
|
|
99,803 |
|
|
|
|
93,468 |
|
Amortization of
intangible assets from acquisitions |
|
|
6,233 |
|
|
|
|
6,160 |
|
|
|
|
6,710 |
|
|
|
|
18,657 |
|
|
|
|
15,908 |
|
Change in deferred
revenue |
|
|
(19,758 |
) |
|
|
|
(25,456 |
) |
|
|
|
(1,123 |
) |
|
|
|
(61,097 |
) |
|
|
|
14,085 |
|
Restructuring expense,
net |
|
|
416 |
|
|
|
|
12,855 |
|
|
|
|
287 |
|
|
|
|
16,732 |
|
|
|
|
27,672 |
|
Gain (loss) on legal
settlements |
|
|
(1,681 |
) |
|
|
|
- |
|
|
|
|
- |
|
|
|
|
(1,681 |
) |
|
|
|
- |
|
Tax effect of non-GAAP
adjustments to net income (loss) |
|
|
(15,912 |
) |
|
|
|
(2,174 |
) |
|
|
|
1,458 |
|
|
|
|
(23,007 |
) |
|
|
|
(7,015 |
) |
Non-GAAP net
income (loss) |
$ |
|
3,681 |
|
|
$ |
|
(7,578 |
) |
|
$ |
|
(6,681 |
) |
|
$ |
|
(10,610 |
) |
|
$ |
|
(10,131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP and
Non-GAAP diluted shares |
|
|
940,032 |
|
|
|
|
911,699 |
|
|
|
|
884,021 |
|
|
|
|
910,469 |
|
|
|
|
869,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income (loss) per share: |
$ |
|
0.00 |
|
|
$ |
|
(0.01 |
) |
|
$ |
|
(0.01 |
) |
|
$ |
|
(0.01 |
) |
|
$ |
|
(0.01 |
) |
Reconciliation
of Cash provided by (used in) operating activities to Free cash
flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities |
|
|
(5,112 |
) |
|
|
|
4,202 |
|
|
|
|
(2,416 |
) |
|
|
|
(47,912 |
) |
|
|
|
(8,856 |
) |
Acquisition of property
and equipment |
|
|
(1,608 |
) |
|
|
|
(3,127 |
) |
|
|
|
(2,429 |
) |
|
|
|
(6,847 |
) |
|
|
|
(7,078 |
) |
Excess tax benefits
(loss) from stock-based awards |
|
|
90 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
90 |
|
|
|
|
- |
|
Free cash
flow |
$ |
|
(6,630 |
) |
|
$ |
|
1,075 |
|
|
$ |
|
(4,845 |
) |
|
$ |
|
(54,669 |
) |
|
$ |
|
(15,934 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP provision for (benefit
from) income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP provision for
(benefit from) income taxes |
|
|
(9,381 |
) |
|
|
|
991 |
|
|
|
|
(783 |
) |
|
|
|
(6,810 |
) |
|
|
|
(9,874 |
) |
Stock-based
expense |
|
|
7,351 |
|
|
|
|
2,847 |
|
|
|
|
(72 |
) |
|
|
|
14,762 |
|
|
|
|
3,691 |
|
Amortization of
intangible assets from acquisitions |
|
|
3,858 |
|
|
|
|
643 |
|
|
|
|
23 |
|
|
|
|
5,190 |
|
|
|
|
629 |
|
Acquisition-related
transaction expenses |
|
|
1,248 |
|
|
|
|
- |
|
|
|
|
(169 |
) |
|
|
|
1,248 |
|
|
|
|
254 |
|
Contingent
consideration fair value adjustment |
|
|
- |
|
|
|
|
- |
|
|
|
|
(85 |
) |
|
|
|
1,035 |
|
|
|
|
793 |
|
Change in deferred
revenue |
|
|
(562 |
) |
|
|
|
(2,685 |
) |
|
|
|
(445 |
) |
|
|
|
(4,995 |
) |
|
|
|
556 |
|
Restructuring expense,
net |
|
|
2,905 |
|
|
|
|
1,369 |
|
|
|
|
(710 |
) |
|
|
|
4,655 |
|
|
|
|
1,092 |
|
Gain (loss) on legal
settlements |
|
|
1,112 |
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
1,112 |
|
|
|
|
- |
|
Non-GAAP
provision for (benefit from) income taxes |
$ |
|
6,531 |
|
|
$ |
|
3,165 |
|
|
$ |
|
(2,241 |
) |
|
$ |
|
16,197 |
|
|
$ |
|
(2,859 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC. |
RECONCILIATION OF GAAP TO NON-GAAP FOURTH QUARTER 2015
OUTLOOK |
(In thousands, except per share data,
unaudited) |
|
|
|
Fourth Quarter 2015 |
Reconciliation of
Revenue to Bookings |
|
|
Revenue range |
$ |
170,000 – 185,000 |
Change in deferred
revenue |
|
|
(5,000 |
) |
Bookings
range |
$ |
165,000 – 180,000 |
|
|
|
Reconciliation of
Net income (loss) to Adjusted EBITDA |
|
|
Net income (loss)
range |
$ |
(75,000) – (53,000) |
Provision for (benefit
from) income taxes |
|
0 – 3,000 |
Other income (expense),
net |
|
|
(2,000 |
) |
Interest income (expense),
net |
|
|
(1,000 |
) |
Restructuring expense,
net |
|
31,000 – 21,000 |
Depreciation and
amortization |
|
|
12,000 |
|
Stock-based expense |
|
35,000 – 30,000 |
Change in deferred
revenue |
|
|
(5,000 |
) |
Adjusted EBITDA
range |
$ |
(5,000) – 5,000 |
|
|
|
Reconciliation of
Net income (loss) to Non-GAAP net income (loss) |
|
|
Net income (loss)
range |
$ |
(75,000) – (53,000) |
Stock-based expense |
|
35,000 – 30,000 |
Amortization of intangible
assets from acquisitions |
|
|
7,000 |
|
Change in deferred
revenue |
|
|
(5,000 |
) |
Restructuring expense,
net |
|
31,000 – 21,000 |
Tax effect of non-GAAP
adjustments to net income (loss) |
|
(1,000) – (2,000) |
Non-GAAP net
income (loss) range |
$ |
(8,000) – (2,000) |
|
|
|
GAAP and Non-GAAP
diluted shares |
|
|
933,000 |
|
Net income (loss)
per share range |
$ |
(0.08) – (0.06) |
Non-GAAP net
income (loss) per share range |
$ |
(0.01) – (0.00) |
Investors – Melissa Fisher
415-339-5266
investors@zynga.com
Press – Stephanie Hess
415-503-0303
press@zynga.com
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