Delivered Results Above Guidance Range
With $182M in Bookings and $11M in Adjusted EBITDA
Zynga Inc. (NASDAQ:ZNGA), a leading social game developer, today
announced financial results for the first quarter ended
March 31, 2016. In addition to today’s press release, a copy
of our Q1 2016 Quarterly Earnings Letter, which outlines our Q1
2016 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, May 4, to discuss the
Company's Q1 2016 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.
“It’s been a productive two months leading Zynga as CEO. I’m
seeing our momentum improve as our teams continue their commitment
to growing our established live franchises and demonstrate more
cost and operating discipline. As a result, Q1 bookings were above
the high end of our guidance range at $182 million, and Adjusted
EBITDA was above our range at $11 million. Our mobile momentum
continued with mobile now representing 76% of our total bookings,
up from 73% from last quarter, and total mobile audience up 7% from
last quarter,” said Frank Gibeau, CEO of Zynga. “Zynga has all the
ingredients it needs for a successful turnaround. My priority is to
bring our founding social gaming vision to life in our games and
lead our teams to deliver high quality experiences for players on
time and profitably.”
“Since joining, the biggest surprise for me has been how much
operating leverage we have across the company, which we can unlock
with improved planning, more focused execution and cost control.
That means putting in place more disciplined, consistent
development practices and more cross team collaboration. Over the
long term, there’s no reason why Zynga’s margins can’t be more in
line with its peers. We’re committed to improving our operating
leverage and cost management to attain those levels. Longer term,
we’re building a world class studio and innovative creative
culture. In my experience, the best games in the world are made by
small, complete teams with great chemistry who build games in a
predictable and profitable way,” said Gibeau.
Financial Highlights
- Bookings of $182 million; above the high end of the guidance
range, up 8% year-over-year and flat sequentially.
- Adjusted EBITDA of $11 million; above the guidance range.
- Advertising and other bookings up 42% year-over-year.
- $857 million in cash, cash equivalents and marketable
securities.
- Completed the remaining $102 million of $200 million share
repurchase announced at Q3 earnings.
Mobile Highlights
- Mobile bookings of $139 million or 76% of overall bookings, up
31% year-over-year and up 4% sequentially.
- Average Mobile Daily Active Users (mobile DAUs): 16 million; up
7% sequentially.
- Apple is now our largest platform partner, surpassing Facebook
in terms of online game bookings.
Product Highlights
- Slots – Mobile bookings up 77% year-over-year and 13%
sequentially. Launched Willy Wonka and the Chocolate Factory Slots
which is now in the top 30 grossing Casino charts in the Apple App
Store; entered into soft launch with True Vegas Slots and this week
we launched Spin It Rich! Slots worldwide.
- Zynga Poker – Mobile bookings up 13% year-over-year and 8%
sequentially.
- Words With Friends – Delivered strong mobile bookings up 60%
year-over-year.
- Match-3 – Launched Zindagi’s Crazy Cake Swap, which received
Best New Game featuring from both Apple and Google at launch;
entered into soft launch with two new games, Wizard of Oz Magic
Match and Ice Age Arctic Blast.
- FarmVille – Entered into soft launch with new FarmVille mobile
experience, FarmVille: Tropic Escape; worldwide launch expected in
the second half of 2016.
- CSR2 – Currently testing across 11 test markets with an
expected worldwide launch in early Q3.
- Dawn of Titans – Scaled to 14 test markets with an expected
worldwide launch in late Q4.
Financial Highlights (in thousands, except per
share data)
|
|
|
Three Months Ended |
|
|
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
|
March 31, 2015 |
|
| GAAP
Results |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
186,721 |
|
|
$ |
185,769 |
|
|
$ |
183,293 |
|
| Net income (loss) |
|
$ |
(26,558 |
) |
|
$ |
(51,198 |
) |
|
$ |
(46,496 |
) |
| Diluted net income (loss)
per share |
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.05 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP
Results |
|
|
|
|
|
|
|
|
|
|
|
|
| Bookings |
|
$ |
181,625 |
|
|
$ |
182,104 |
|
|
$ |
167,410 |
|
| Adjusted EBITDA |
|
$ |
10,939 |
|
|
$ |
1,656 |
|
|
$ |
2,093 |
|
| Non-GAAP net income
(loss) |
|
$ |
1,553 |
|
|
$ |
375 |
|
|
$ |
(6,713 |
) |
| Non-GAAP earnings (loss)
per share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Player Metrics (users and payers in
millions)
|
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|
Three Months Ended |
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|
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|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
Q1'16 |
|
|
Q1'16 |
|
|
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
Q/Q |
|
|
Y/Y |
|
| Average daily active users
(DAUs) |
|
|
19 |
|
|
|
18 |
|
|
|
25 |
|
|
|
7 |
% |
|
|
(21 |
)% |
| Average mobile DAUs |
|
|
16 |
|
|
|
15 |
|
|
|
19 |
|
|
|
7 |
% |
|
|
(16 |
)% |
| Average web DAUs |
|
|
3 |
|
|
|
3 |
|
|
|
6 |
|
|
|
10 |
% |
|
|
(37 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average monthly active
user (MAUs) |
|
|
68 |
|
|
|
68 |
|
|
|
100 |
|
|
|
1 |
% |
|
|
(32 |
)% |
| Average mobile MAUs |
|
|
55 |
|
|
|
55 |
|
|
|
76 |
|
|
|
0 |
% |
|
|
(27 |
)% |
| Average web MAUs |
|
|
13 |
|
|
|
13 |
|
|
|
24 |
|
|
|
4 |
% |
|
|
(46 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average daily bookings per
average DAU (ABPU) |
|
$ |
0.103 |
|
|
$ |
0.110 |
|
|
$ |
0.076 |
|
|
|
(6 |
)% |
|
|
36 |
% |
| Average monthly unique
users (MUUs) (1) |
|
|
56 |
|
|
|
48 |
|
|
|
71 |
|
(2 |
) |
|
|
16 |
% |
|
|
(21 |
)% |
| Average monthly unique
payers (MUPs) (1) |
|
|
1.0 |
|
|
|
0.8 |
|
|
|
1.1 |
|
|
|
18 |
% |
|
|
(12 |
)% |
| Payer conversion (1) |
|
|
1.7 |
% |
|
|
1.7 |
% |
|
|
1.5 |
% |
|
|
2 |
% |
|
|
11 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
(1) MUUs, MUPs and payer conversion exclude certain games as our
systems are unable to distinguish whether a player of these games
is also a player of other Zynga games. We exclude players of these
games to avoid potential duplication.
- For the first quarter of 2015, NaturalMotion legacy games (CSR
Racing, CSR Classics and Clumsy Ninja) are excluded from MUUs, MUPs
and payer conversion.
- For the fourth quarter of 2015, NaturalMotion legacy games (CSR
Racing, CSR Classics and Clumsy Ninja) and Rising Tide games (Black
Diamond Casino) are excluded from MUUs, MUPs and payer
conversion.
- For the first quarter of 2016, Rising Ride games (Black Diamond
Casino and Vegas Diamond Slots) and Zindagi legacy games (Yummy
Gummy and Crazy Kitchen) are excluded from MUUs, MUPs and payer
conversion.
(2) In the third quarter of 2015, the company made a
modification to its calculation of MUU to further reduce
duplication. MUU for the first quarter of 2015 has been revised to
reflect the company’s current calculation.
First Quarter 2016 Financial Summary
- Revenue: Revenue was $187 million for the
first quarter of 2016, an increase of 1% compared to the fourth
quarter of 2015 and an increase of 2% compared to the first quarter
of 2015. Online game revenue was $137 million, an increase of 6%
compared to the fourth quarter of 2015 and a decrease of 7%
compared to the first quarter of 2015. Advertising and other
revenue was $50 million, a decrease of 12% compared to the fourth
quarter of 2015 and an increase of 41% compared to the first
quarter of 2015. Zynga Poker, Hit It Rich! Slots, Wizard of Oz
Slots and FarmVille 2 accounted for 19%, 15%, 15% and 14% of online
game revenue, respectively, for the first quarter of 2016 while
FarmVille 2, Zynga Poker, FarmVille 2: Country Escape and Hit It
Rich! Slots accounted for 20%, 19%, 16% and 15%, respectively, for
the first quarter of 2015.
- Bookings: Bookings were $182 million for the
first quarter of 2016, flat compared to the fourth quarter of 2015
and an increase of 8% compared to the first quarter of 2015.
- Net income (loss): Net loss was ($27) million
for the first quarter of 2016, compared to net loss of ($51)
million for the fourth quarter of 2015 and net loss of ($46)
million for the first quarter of 2015. The quarter-over-quarter
decrease in net loss was primarily due to lower costs and expenses
(primarily, in order of significance, restructuring expense, the
elimination of duplicative data center costs and marketing
costs).
- Adjusted EBITDA: Adjusted EBITDA was $11
million for the first quarter of 2016, compared to $2 million in
the fourth quarter of 2015 and $2 million for the first quarter of
2015. The quarter-over-quarter change in adjusted EBITDA was
primarily due to the elimination of duplicative data center costs
and, to a lesser extent, lower marketing costs due to seasonality
in the fourth quarter of 2015.
- Non-GAAP net income (loss): Non-GAAP net
income was $2 million for the first quarter of 2016, compared to
non-GAAP net income of $0.4 million in the fourth quarter of 2015
and non-GAAP net loss of ($7) million in the first quarter of
2015.
- Net income (loss) per share: Diluted net loss
per share was ($0.03) for the first quarter of 2016, compared to
diluted net loss per share of ($0.06) for the fourth quarter of
2015 and diluted net loss per share of ($0.05) for the first
quarter of 2015.
- Non-GAAP earnings (loss) per share: Non-GAAP
earnings per share was $0.00 for the first quarter of 2016,
compared to non-GAAP earnings per share of $0.00 for the fourth
quarter of 2015 and non-GAAP loss per share of ($0.01) for the
first quarter of 2015.
- Cash and cash flow: As of March 31, 2016,
cash, cash equivalents and marketable securities were approximately
$857 million, compared to $987 million as of December 31,
2015. In the first quarter of 2016, we repurchased 42.2 million
shares of our Class A common stock at a weighted average price of
$2.40 per share for a total of $102 million. Cash flow from
operations was ($3) million for the first quarter of 2016, compared
to $3 million for the fourth quarter of 2015 and ($47) million for
the first quarter of 2015. Free cash flow was ($6) million for the
first quarter of 2016 compared to $3 million for the fourth quarter
of 2015 and ($49) million for the first quarter of 2015.
Second Quarter Outlook
Zynga’s outlook for the second quarter of 2016 is as
follows:
- Revenue is projected to be in the range of $170 million to $180
million
- Net loss is projected to be in the range of ($26) million to
($20) million
- Net loss per share is projected to be in the range of ($0.03)
to ($0.02) based on a share count projected to be approximately 875
million shares
- Bookings are projected to be in the range of $160 million to
$170 million
- Adjusted EBITDA is projected to be in the range of break-even
to $5 million.
- Non-GAAP 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 875 million shares
Conference Call Details
In addition to today’s press release, a copy of our Q1 2016
Quarterly Earnings Letter, which outlines our Q1 2016 financial
results and business outlook, is available on our website at
http://investor.zynga.com.
Zynga will host a live Q&A session today, May 4, 2016, 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) 537-0745 International Dial-In
Number: (253) 237-1142 Conference ID: 81887124
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=11743
Key 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 Annual Report on Form 10-K for the year
ended December 31, 2015 and, when filed, our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2016, for our
definitions of “DAU,” “MAU,” “MUU,” “MUP” and “ABPU”.
MUUs, MUPs and payer conversion in this press release exclude
Rising Ride games (Black Diamond Casino and Vegas Diamond Slots)
and Zindagi legacy games (Yummy Gummy and Crazy Kitchen) as our
systems are unable to distinguish whether a player of these games
is also a player of other Zynga games. We exclude players of these
games to avoid potential duplication.
Forward-Looking Statements
This press release contains forward-looking statements relating
to, among other things, our outlook for the second quarter of 2016,
including revenue, net income (loss), net income (loss) per share,
bookings, Adjusted EBITDA and non-GAAP income (loss) per share);
certain other financial items necessary for GAAP to non-GAAP
reconciliation; our future operational plans, use of cash,
strategies and prospects; our cost structure and cost reduction
plans and estimated savings and charges; our ability to accelerate
execution, drive profitability and nurture creativity and
innovation while reducing costs and lowering discretionary spend;
the breadth and depth of our 2016 game slate and the success of
these games, including recently launched Willy Wonka and the
Chocolate Factory Slots, Spin It Rich! Slots, Vegas Diamond Slots
and Crazy Cake Swap and future launches of True Vegas Slots, Wizard
of Oz Magic Match, Ice Age: Arctic Blast, FarmVille: Tropic Escape,
Dawn of Titans and CSR2; our ability to change our mix of R&D
and unlaunched game slate to live games; our ability to increase
the predictability of our business; our continued transition to
mobile; our ability to sustain player engagement, develop
compelling social features, optimize to increase long-term player
retention and the lifetime value of our players, generate installs
(including organically and through accretive player acquisition
spend) and monetize our live games (including our Slots franchise
games, Words With Friends, Zynga Poker, FarmVille franchise games
and Match-3 franchise games) and games in geo-lock testing
(including True Vegas Slots, Wizard of Oz Magic Match, Ice Age:
Arctic Blast, FarmVille: Tropic Escape, Dawn of Titans and CSR2);
our ability to grow our mobile bookings in 2016 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 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 launch of our 2016
game slate (including the games noted above); 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, Words With Friends, Zynga Poker,
FarmVille franchise and Match-3 franchise; 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; leverage licensed
brands like Wizard of Oz and Willy Wonka and the Chocolate Factory,
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; and the
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.
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, 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. 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, 2015, and, when filed, our Quarterly Report on Form
10-Q for the three months ended March 31, 2016, copies of which may
be obtained by visiting our Investor Relations web site at
http://investor.zynga.com or the Securities and Exchange
Commission’s (the “SEC”) 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
three months ended March 31, 2016 could differ from the preliminary
results we have announced in this press release.
Non-GAAP Financial Measures
We have provided in this press release certain non-GAAP
financial measures, including bookings, Adjusted EBITDA, non-GAAP
net income (loss), free cash flow, non-GAAP provision for (benefit
from) income taxes, non-GAAP net income (loss) per share, and
non-GAAP diluted share count, to supplement our consolidated
financial statements prepared in accordance with GAAP (our “GAAP
financial statements”). Management uses these non-GAAP financial
measures internally in analyzing our financial results to assess
operational performance and liquidity. Our non-GAAP financial
measures may be different from non-GAAP financial measures used by
other companies.
The presentation of these non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for our
GAAP financial statements. 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 of
these non-GAAP financial measures to the most directly comparable
GAAP financial measures in (i) this press release announcing
our financial results for the three months ended March 31, 2016
(which is included as Exhibit 99.1 to our Current Report on Form
8-K, filed with the SEC on May 4, 2016, a copy 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), (ii) when filed, our Quarterly Report on Form 10-Q
for the three months ended March 31, 2016, a copy 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 (iii) our first quarter of 2016 earnings slides
presentation, dated May 4, 2016, a copy of which may be obtained by
visiting our Investor Relations web site at
http://investor.zynga.com.
Some limitations of the non-GAAP financial measures included in
this press release:
- Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP
provision for (benefit from) expense do not include the impact of
stock-based expense, acquisition-related transaction expenses,
contingent consideration fair value adjustments and restructuring
expense;
- Bookings, Adjusted EBITDA, non-GAAP net income (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 excludes depreciation and amortization of
intangible assets, while non-GAAP net income (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; and
- 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.
Because of these limitations, you should consider the non-GAAP
financial measures presented in this press release with our GAAP
financial statements. See the GAAP to non-GAAP reconciliations in
this press release and in the places listed above for further
details.
ZYNGA INC.CONSOLIDATED
BALANCE SHEETS(In thousands,
unaudited)
|
|
|
March 31, |
|
|
December 31, |
|
|
|
|
2016 |
|
|
2015 |
|
| Assets |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
731,451 |
|
|
$ |
742,217 |
|
| Marketable securities |
|
|
126,010 |
|
|
|
245,033 |
|
| Accounts receivable |
|
|
72,393 |
|
|
|
79,610 |
|
| Income tax receivable |
|
|
4,638 |
|
|
|
5,233 |
|
| Restricted cash |
|
|
2,082 |
|
|
|
209 |
|
| Other current assets |
|
|
41,065 |
|
|
|
39,988 |
|
| Total current assets |
|
|
977,639 |
|
|
|
1,112,290 |
|
| |
|
|
|
|
|
|
|
|
| Goodwill |
|
|
652,436 |
|
|
|
657,671 |
|
| Other intangible assets,
net |
|
|
58,406 |
|
|
|
64,016 |
|
| Property and equipment,
net |
|
|
271,590 |
|
|
|
273,221 |
|
| Restricted cash |
|
|
250 |
|
|
|
986 |
|
| Other long-term
assets |
|
|
17,298 |
|
|
|
16,446 |
|
| Total assets |
|
$ |
1,977,619 |
|
|
$ |
2,124,630 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
13,398 |
|
|
$ |
29,676 |
|
| Other current liabilities |
|
|
61,107 |
|
|
|
77,691 |
|
| Deferred revenue |
|
|
123,920 |
|
|
|
128,839 |
|
| Total current
liabilities |
|
|
198,425 |
|
|
|
236,206 |
|
| Deferred revenue |
|
|
27 |
|
|
|
204 |
|
| Deferred tax
liabilities |
|
|
6,461 |
|
|
|
6,026 |
|
| Other non-current
liabilities |
|
|
95,928 |
|
|
|
95,293 |
|
| Total liabilities |
|
|
300,841 |
|
|
|
337,729 |
|
| |
|
|
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Common stock and
additional paid in capital |
|
|
3,270,310 |
|
|
|
3,234,551 |
|
| Treasury stock |
|
|
(102,130 |
) |
|
|
(98,942 |
) |
| Accumulated other
comprehensive income (loss) |
|
|
(69,581 |
) |
|
|
(52,388 |
) |
| Accumulated deficit |
|
|
(1,421,821 |
) |
|
|
(1,296,320 |
) |
| Total stockholders’
equity |
|
|
1,676,778 |
|
|
|
1,786,901 |
|
| Total liabilities and
stockholders’ equity |
|
$ |
1,977,619 |
|
|
$ |
2,124,630 |
|
| |
|
|
|
|
|
|
|
|
ZYNGA INC.CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per
share data, unaudited)
|
|
|
Three Months Ended |
|
|
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
|
March 31, 2015 |
|
| Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| Online game |
|
$ |
137,057 |
|
|
$ |
129,463 |
|
|
$ |
147,963 |
|
| Advertising and other |
|
|
49,664 |
|
|
|
56,306 |
|
|
|
35,330 |
|
| Total revenue |
|
|
186,721 |
|
|
|
185,769 |
|
|
|
183,293 |
|
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue |
|
|
57,139 |
|
|
|
63,397 |
|
|
|
57,622 |
|
| Research and development |
|
|
87,737 |
|
|
|
85,099 |
|
|
|
107,520 |
|
| Sales and marketing |
|
|
46,344 |
|
|
|
53,066 |
|
|
|
31,839 |
|
| General and administrative |
|
|
22,384 |
|
|
|
39,333 |
|
|
|
40,381 |
|
| Total costs and
expenses |
|
|
213,604 |
|
|
|
240,895 |
|
|
|
237,362 |
|
| Income (loss) from
operations |
|
|
(26,883 |
) |
|
|
(55,126 |
) |
|
|
(54,069 |
) |
| Interest income |
|
|
705 |
|
|
|
603 |
|
|
|
794 |
|
| Other income (expense),
net |
|
|
2,100 |
|
|
|
1,463 |
|
|
|
8,359 |
|
| Income (loss) before
income taxes |
|
|
(24,078 |
) |
|
|
(53,060 |
) |
|
|
(44,916 |
) |
| Provision for (benefit
from) income taxes |
|
|
2,480 |
|
|
|
(1,862 |
) |
|
|
1,580 |
|
| Net income (loss) |
|
$ |
(26,558 |
) |
|
$ |
(51,198 |
) |
|
$ |
(46,496 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
$ |
(0.03 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.05 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares used
to compute net income (loss) per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
|
871,093 |
|
|
|
922,540 |
|
|
|
898,344 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based expense included in the
above line items |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue |
|
$ |
649 |
|
|
$ |
1,712 |
|
|
$ |
1,072 |
|
| Research and development |
|
|
24,203 |
|
|
|
24,063 |
|
|
|
28,317 |
|
| Sales and marketing |
|
|
1,991 |
|
|
|
2,320 |
|
|
|
1,519 |
|
| General and administrative |
|
|
2,765 |
|
|
|
3,677 |
|
|
|
10,554 |
|
| Total stock-based expense |
|
$ |
29,608 |
|
|
$ |
31,772 |
|
|
$ |
41,462 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(In thousands,
unaudited)
|
|
|
Three Months Ended |
|
|
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
|
March 31, 2015 |
|
| Operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(26,558 |
) |
|
$ |
(51,198 |
) |
|
$ |
(46,496 |
) |
| Adjustments to reconcile
net income (loss) to net cash provided by (used in)operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
10,812 |
|
|
|
11,966 |
|
|
|
17,722 |
|
| Stock-based expense |
|
|
29,608 |
|
|
|
31,772 |
|
|
|
41,462 |
|
| (Gain) loss from sales of
investments, assets and other, net |
|
|
11 |
|
|
|
725 |
|
|
|
(6,056 |
) |
| Tax benefits (costs) from
stock-based awards |
|
|
— |
|
|
|
899 |
|
|
|
— |
|
| Excess tax benefits (costs) from
stock-based awards |
|
|
— |
|
|
|
(899 |
) |
|
|
— |
|
| Accretion and amortization on
marketable securities |
|
|
259 |
|
|
|
770 |
|
|
|
2,087 |
|
| Deferred income taxes |
|
|
1,422 |
|
|
|
(3,542 |
) |
|
|
998 |
|
| Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts receivable, net |
|
|
7,217 |
|
|
|
7,604 |
|
|
|
10,090 |
|
| Income tax receivable |
|
|
595 |
|
|
|
(217 |
) |
|
|
(1,198 |
) |
| Other assets |
|
|
(1,812 |
) |
|
|
(4,307 |
) |
|
|
(7,687 |
) |
| Accounts payable |
|
|
(12,818 |
) |
|
|
(1,292 |
) |
|
|
1,063 |
|
| Deferred revenue |
|
|
(5,096 |
) |
|
|
(3,665 |
) |
|
|
(15,883 |
) |
| Other liabilities |
|
|
(6,945 |
) |
|
|
14,849 |
|
|
|
(43,104 |
) |
| Net cash provided by (used
in) operating activities |
|
|
(3,305 |
) |
|
|
3,465 |
|
|
|
(47,002 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Purchases of marketable
securities |
|
|
— |
|
|
|
— |
|
|
|
(101,091 |
) |
| Sales and maturities of
marketable securities |
|
|
118,900 |
|
|
|
165,181 |
|
|
|
234,555 |
|
| Acquisition of property
and equipment |
|
|
(2,654 |
) |
|
|
(985 |
) |
|
|
(2,112 |
) |
| Business acquisitions, net
of cash acquired |
|
|
(12,500 |
) |
|
|
— |
|
|
|
— |
|
| Proceeds from sale of
property and equipment |
|
|
398 |
|
|
|
64 |
|
|
|
— |
|
| Proceeds from sale of
equity method investment |
|
|
— |
|
|
|
— |
|
|
|
10,507 |
|
| Net cash provided by (used
in) investing activities |
|
|
104,144 |
|
|
|
164,260 |
|
|
|
141,859 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Taxes paid related to net
share settlement of equity awards |
|
|
(919 |
) |
|
|
(1,036 |
) |
|
|
(1,008 |
) |
| Repurchases of common
stock |
|
|
(112,392 |
) |
|
|
(88,409 |
) |
|
|
— |
|
| Proceeds from employee
stock purchase plan and exercise of stock options |
|
|
2,476 |
|
|
|
275 |
|
|
|
3,390 |
|
| Excess tax benefits
(costs) from stock-based awards |
|
|
— |
|
|
|
899 |
|
|
|
— |
|
| Acquisition-related
contingent consideration payment |
|
|
— |
|
|
|
— |
|
|
|
(10,790 |
) |
| Net cash provided by (used
in) financing activities |
|
|
(110,835 |
) |
|
|
(88,271 |
) |
|
|
(8,408 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Effect of exchange rate
changes on cash and cash equivalents |
|
|
(770 |
) |
|
|
(257 |
) |
|
|
(297 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in
cash and cash equivalents |
|
|
(10,766 |
) |
|
|
79,197 |
|
|
|
86,152 |
|
| Cash and cash equivalents,
beginning of period |
|
|
742,217 |
|
|
|
663,020 |
|
|
|
131,303 |
|
| Cash and cash equivalents,
end of period |
|
$ |
731,451 |
|
|
$ |
742,217 |
|
|
$ |
217,455 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC.RECONCILIATION
OF GAAP TO NON-GAAP RESULTS(In thousands, except
per share data, unaudited)
|
|
|
Three Months Ended |
|
|
|
|
March 31, 2016 |
|
|
December 31, 2015 |
|
|
March 31, 2015 |
|
| Reconciliation of
Revenue to Bookings |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
186,721 |
|
|
$ |
185,769 |
|
|
$ |
183,293 |
|
| Change in deferred
revenue |
|
|
(5,096 |
) |
|
|
(3,665 |
) |
|
|
(15,883 |
) |
|
Bookings |
|
$ |
181,625 |
|
|
$ |
182,104 |
|
|
$ |
167,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
Net income (loss) to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(26,558 |
) |
|
$ |
(51,198 |
) |
|
$ |
(46,496 |
) |
| Provision for (benefit
from) income taxes |
|
|
2,480 |
|
|
|
(1,862 |
) |
|
|
1,580 |
|
| Other income (expense),
net |
|
|
(2,100 |
) |
|
|
(1,463 |
) |
|
|
(8,359 |
) |
| Interest income |
|
|
(705 |
) |
|
|
(603 |
) |
|
|
(794 |
) |
| Restructuring expense,
net |
|
|
468 |
|
|
|
19,748 |
|
|
|
3,461 |
|
| Depreciation and
amortization |
|
|
10,812 |
|
|
|
11,966 |
|
|
|
17,722 |
|
| Acquisition-related
transaction expenses |
|
|
— |
|
|
|
249 |
|
|
|
— |
|
| Contingent consideration
fair value adjustment |
|
|
2,030 |
|
|
|
(3,288 |
) |
|
|
9,400 |
|
| Stock-based expense |
|
|
29,608 |
|
|
|
31,772 |
|
|
|
41,462 |
|
| Change in deferred
revenue |
|
|
(5,096 |
) |
|
|
(3,665 |
) |
|
|
(15,883 |
) |
| Adjusted
EBITDA |
|
$ |
10,939 |
|
|
$ |
1,656 |
|
|
$ |
2,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
Net income (loss) to Non-GAAP net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(26,558 |
) |
|
$ |
(51,198 |
) |
|
$ |
(46,496 |
) |
| Restructuring expense,
net |
|
|
468 |
|
|
|
19,748 |
|
|
|
3,461 |
|
| Amortization of intangible
assets from acquisitions |
|
|
7,379 |
|
|
|
7,402 |
|
|
|
6,264 |
|
| Acquisition-related
transaction expenses |
|
|
— |
|
|
|
249 |
|
|
|
— |
|
| Contingent consideration
fair value adjustment |
|
|
2,030 |
|
|
|
(3,288 |
) |
|
|
9,400 |
|
| Stock-based expense |
|
|
29,608 |
|
|
|
31,772 |
|
|
|
41,462 |
|
| Change in deferred
revenue |
|
|
(5,096 |
) |
|
|
(3,665 |
) |
|
|
(15,883 |
) |
| Tax effect of non-GAAP
adjustments to net income (loss) |
|
|
(6,278 |
) |
|
|
(645 |
) |
|
|
(4,921 |
) |
| Non-GAAP net
income (loss) |
|
$ |
1,553 |
|
|
$ |
375 |
|
|
$ |
(6,713 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP diluted
shares |
|
|
871,093 |
|
|
|
922,540 |
|
|
|
898,344 |
|
| Non-GAAP diluted
shares |
|
|
882,350 |
|
|
|
939,110 |
|
|
|
898,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP earnings
(loss) per share: |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
Cash provided by operating activities to free cash
flow |
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by (used
in) operating activities |
|
|
(3,305 |
) |
|
|
3,465 |
|
|
|
(47,002 |
) |
| Acquisition of property
and equipment |
|
|
(2,654 |
) |
|
|
(985 |
) |
|
|
(2,112 |
) |
| Excess tax benefits
(costs) from stock-based awards |
|
|
— |
|
|
|
899 |
|
|
|
— |
|
| Free cash
flow |
|
$ |
(5,959 |
) |
|
$ |
3,379 |
|
|
$ |
(49,114 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
GAAP to Non-GAAP provision for (benefit from) income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP provision for
(benefit from) income taxes |
|
|
2,480 |
|
|
|
(1,862 |
) |
|
|
1,580 |
|
| Restructuring expense,
net |
|
|
85 |
|
|
|
2,240 |
|
|
|
381 |
|
| Amortization of intangible
assets from acquisitions |
|
|
1,347 |
|
|
|
378 |
|
|
|
689 |
|
| Acquisition-related
transaction expenses |
|
|
— |
|
|
|
453 |
|
|
|
— |
|
| Contingent consideration
fair value adjustment |
|
|
371 |
|
|
|
(964 |
) |
|
|
1,035 |
|
| Stock-based expense |
|
|
5,405 |
|
|
|
396 |
|
|
|
4,564 |
|
| Change in deferred
revenue |
|
|
(930 |
) |
|
|
(1,858 |
) |
|
|
(1,748 |
) |
| Non-GAAP provision
for (benefit from) income taxes |
|
$ |
8,758 |
|
|
$ |
(1,217 |
) |
|
$ |
6,501 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC.RECONCILIATION
OF GAAP TO NON-GAAP SECOND QUARTER 2016 OUTLOOK(In
thousands, except per share data, unaudited)
|
|
|
Second Quarter 2016 |
|
| Reconciliation of
Revenue to Bookings |
|
|
|
|
| Revenue range |
$ |
170,000 - 180,000 |
|
| Change in deferred
revenue |
|
|
|
(10,000 |
) |
| Bookings
range |
$ |
160,000 - 170,000 |
|
| |
|
|
|
|
| Reconciliation of
Net income (loss) to Adjusted EBITDA |
|
|
|
|
| Net income (loss)
range |
$ |
(26,000) - (20,000) |
|
| Provision for (benefit
from) income taxes |
|
0 - 2,000 |
|
| Other income (expense),
net |
|
(1,000) - (2,000) |
|
| Interest income |
|
|
|
(1,000 |
) |
| Depreciation and
amortization |
|
|
|
11,000 |
|
| Stock-based expense |
|
27,000 - 25,000 |
|
| Change in deferred
revenue |
|
|
|
(10,000 |
) |
| Adjusted EBITDA
range |
$ |
0 - 5,000 |
|
| |
|
|
|
|
| Reconciliation of
Net income (loss) to Non-GAAP net income (loss) |
|
|
|
|
| Net income (loss)
range |
$ |
(26,000) - (20,000) |
|
| Amortization of intangible
assets from acquisitions |
|
|
|
7,000 |
|
| Stock-based expense |
|
27,000 - 25,000 |
|
| Change in deferred
revenue |
|
|
|
(10,000 |
) |
| Tax effect of non-GAAP
adjustments to net income (loss) |
|
(3,000) - (4,000) |
|
| Non-GAAP net
income (loss) range |
$ |
(5,000) - (2,000) |
|
| |
|
|
|
|
| GAAP and Non-GAAP
diluted shares |
|
|
|
875,000 |
|
| Net income (loss)
per share range |
$ |
(0.03) - (0.02) |
|
| Non-GAAP earnings
(loss) per share range |
$ |
(0.01) - 0.00 |
|
| |
|
|
|
Joo Mi KimSenior Director of Finance and Investor
Relations415-339-5266joomi@zynga.com
Press ContactStephanie Hessshess@zynga.com
Zynga (NASDAQ:ZNGA)
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