Zynga Inc. (NASDAQ:ZNGA), a leading social game developer, today
announced financial results for the second quarter ended
June 30, 2016. In addition to today’s press release, a copy of
our Q2 2016 Quarterly Earnings Letter, which outlines our Q2 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, August 4, to discuss Zynga’s Q2 2016 performance.
“We are continuing to make great progress in our turnaround. Our
Q2 bookings and Adjusted EBITDA were both above the high end of our
guidance range, with bookings at $175 million and Adjusted EBITDA
at $12 million. In Q2, we launched 4 new games, including the
successful release of NaturalMotion’s highly anticipated CSR2. Our
top live services saw growth, with Words With Friends, Social Slots
and Zynga Poker delivering strong results this quarter. We are
tightening our operating model and improving our cost management as
we do more with less, particularly in marketing. While we have more
work to do in our turnaround, I am encouraged to see the momentum
we feel in our products and company show up in our results,” said
Frank Gibeau, CEO of Zynga.
Financial Highlights
- GAAP revenue of $182 million and GAAP net loss of $4
million
- Bookings of $175 million; above the high end of the guidance
range, flat year-over-year and down 4% sequentially
- Adjusted EBITDA of $12 million; above the guidance range
- $868 million in cash, cash equivalents and marketable
securities
- GAAP operating expenses of $132 million, down 15%,
quarter-over-quarter
- Non-GAAP operating expenses of $118 million; down 5%
quarter-over-quarter, driven by a 14% reduction in marketing
expenses
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
| (in thousands, except
per share data) |
|
June 30, 2016 |
|
|
March 31, 2016 |
|
|
June 30, 2015 |
|
|
June 30, 2016 |
|
|
June 30, 2015 |
|
| GAAP
Results |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
181,735 |
|
|
$ |
186,721 |
|
|
$ |
199,918 |
|
|
$ |
368,456 |
|
|
$ |
383,211 |
|
| Net income (loss) |
|
$ |
(4,446 |
) |
|
$ |
(26,558 |
) |
|
$ |
(26,868 |
) |
|
$ |
(31,004 |
) |
|
$ |
(73,364 |
) |
| Diluted net income (loss)
per share |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.08 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP
Results |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Bookings |
|
$ |
174,653 |
|
|
$ |
181,625 |
|
|
$ |
174,462 |
|
|
$ |
356,278 |
|
|
$ |
341,872 |
|
| Adjusted EBITDA |
|
$ |
11,565 |
|
|
$ |
10,939 |
|
|
$ |
963 |
|
|
$ |
22,504 |
|
|
$ |
3,056 |
|
| Non-GAAP net income
(loss) |
|
$ |
1,555 |
|
|
$ |
1,553 |
|
|
$ |
(7,578 |
) |
|
$ |
3,108 |
|
|
$ |
(14,291 |
) |
| Non-GAAP earnings (loss)
per share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
|
$ |
0.00 |
|
|
$ |
(0.02 |
) |
| |
|
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|
Player Metrics (users and payers in
millions)
|
|
|
Three Months Ended |
|
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|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
Q2'16 |
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|
Q2'16 |
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|
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
Q/Q |
|
|
Y/Y |
|
| Average daily active users
(DAUs) |
|
|
18 |
|
|
|
19 |
|
|
|
21 |
|
|
|
(8 |
)% |
|
|
(15 |
)% |
| Average mobile DAUs |
|
|
15 |
|
|
|
16 |
|
|
|
17 |
|
|
|
(7 |
)% |
|
|
(11 |
)% |
| Average web DAUs |
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
|
|
(10 |
)% |
|
|
(28 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average monthly active
user (MAUs) |
|
|
61 |
|
|
|
68 |
|
|
|
83 |
|
|
|
(11 |
)% |
|
|
(26 |
)% |
| Average mobile MAUs |
|
|
49 |
|
|
|
55 |
|
|
|
64 |
|
|
|
(11 |
)% |
|
|
(23 |
)% |
| Average web MAUs |
|
|
12 |
|
|
|
13 |
|
|
|
19 |
|
|
|
(11 |
)% |
|
|
(37 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
| Average daily bookings per
average DAU (ABPU) |
|
$ |
0.107 |
|
|
$ |
0.103 |
|
|
$ |
0.091 |
|
|
|
4 |
% |
|
|
17 |
% |
| Average monthly unique
users (MUUs) (1) |
|
|
50 |
|
|
|
56 |
|
|
|
60 |
|
|
(2 |
) |
|
(11 |
)% |
|
|
(16 |
)% |
| Average monthly unique
payers (MUPs) (1) |
|
|
0.9 |
|
|
|
1.0 |
|
|
|
1.0 |
|
|
|
(5 |
)% |
|
|
(5 |
)% |
| Payer conversion (1) |
|
|
1.8 |
% |
|
|
1.7 |
% |
|
|
1.6 |
% |
|
|
7 |
% |
|
|
13 |
% |
| |
|
|
|
|
|
|
|
|
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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 second quarter of 2015, NaturalMotion legacy games (CSR
Racing, CSR Classics and Clumsy Ninja) are excluded from MUUs, MUPs
and payer conversion.
- For the first and second quarter of 2016, Rising Tide 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, Zynga made a
modification to its calculation of MUU to further reduce
duplication. MUU for the second quarter of 2015 has been revised to
reflect the Zynga’s current calculation.
Second Quarter 2016 Financial Summary
- Revenue: Revenue was $182 million for the
second quarter of 2016, a decrease of 3% compared to the first
quarter of 2016 and a decrease of 9% compared to the second quarter
of 2015. Online game revenue was $136 million, a decrease of 1%
compared to the first quarter of 2016 and a decrease of 16%
compared to the second quarter of 2015. Advertising and other
revenue was $46 million, a decrease of 8% compared to the first
quarter of 2016 and an increase of 22% compared to the second
quarter of 2015. Zynga Poker, Wizard of Oz Slots, FarmVille 2, Hit
It Rich! Slots and Empires & Allies accounted for 19%, 15%,
12%, 11% and 10% of online game revenue, respectively, for the
second quarter of 2016 while Zynga Poker, FarmVille 2, FarmVille 2:
Country Escape, Hit It Rich! Slots, and Wizard of Oz Slots,
accounted for 18%, 18%, 16%, 16%, and 10%, respectively, for the
second quarter of 2015.
- Bookings: Bookings were $175 million for the
second quarter of 2016, a decrease of 4% compared to the first
quarter of 2016 and flat compared to the second quarter of
2015.
- Net income (loss): Net loss was ($4) million
for the second quarter of 2016, compared to net loss of ($27)
million for the first quarter of 2016 and net loss of ($27) million
for the second quarter of 2015. The quarter-over-quarter decrease
in net loss was primarily due to lower costs and expenses
(primarily due to a benefit for the change in estimated fair value
of the contingent consideration liability for Rising Tide in the
second quarter of 2016 and, to a lesser extent, lower marketing
costs).
- Adjusted EBITDA: Adjusted EBITDA was $12
million for the second quarter of 2016, compared to $11 million in
the first quarter of 2016 and $1 million for the second quarter of
2015. The quarter-over-quarter change in adjusted EBITDA was
primarily due to lower marketing costs.
- Non-GAAP net income (loss): Non-GAAP net
income was $2 million for the second quarter of 2016, compared to
non-GAAP net income of $2 million in the first quarter of 2016 and
non-GAAP net loss of ($8) million in the second quarter of
2015.
- Net income (loss) per share: Diluted net loss
per share was ($0.01) for the second quarter of 2016, compared to
diluted net loss per share of ($0.03) for the first quarter of 2016
and diluted net loss per share of ($0.03) for the second quarter of
2015.
- Non-GAAP earnings (loss) per share: Non-GAAP
earnings per share was $0.00 for the second quarter of 2016,
compared to non-GAAP earnings per share of $0.00 for the first
quarter of 2016 and non-GAAP loss per share of ($0.01) for the
second quarter of 2015.
- Cash and cash flow: As of June 30, 2016,
cash, cash equivalents and marketable securities were approximately
$868 million, compared to $857 million as of March 31, 2016.
Cash flow from operations was $15 million for the second quarter of
2016, compared to ($3) million for the first quarter of 2016 and $4
million for the second quarter of 2015. Free cash flow was $13
million for the second quarter of 2016 compared to ($6) million for
the first quarter of 2016 and $1 million for the second quarter of
2015.
Third Quarter Outlook
Zynga’s outlook for the third 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 ($33) million to
($29) million
- Net loss per share is projected to be in the range of ($0.04)
to ($0.03) based on a share count projected to be approximately 880
million shares
- Bookings are projected to be in the range of $180 million to
$190 million
- Adjusted EBITDA is projected to be in the range of $12 million
to $16 million
- Non-GAAP earnings per share is projected to be $0.01, based on
a diluted share count projected to be approximately 901 million
shares
Conference Call Details
In addition to today’s press release, a copy of our Q2 2016
Quarterly Earnings Letter, which outlines our Q2 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, August 4, 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 Zynga 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: 42132656
About Zynga Inc.
Since its founding in 2007, Zynga's mission has been to connect
the world through games. To-date, more than 1 billion people have
played Zynga's games across Web and mobile, including FarmVille,
Zynga Poker, Words With Friends, Hit it Rich! Slots and CSR Racing.
Zynga's games are available on a number of global platforms
including Apple iOS, Google Android, Facebook and Zynga.com. The
company is headquartered in San Francisco, Calif., and has
additional offices in the U.S., Canada, U.K., Ireland and India.
Learn more about Zynga at http://blog.zynga.com or follow us
on Twitter and Facebook.
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 Quarterly Report on Form 10-Q for the
quarter ended March 31, 2016 and, when filed, our Quarterly Report
on Form 10-Q for the quarter ended June 30, 2016, for our
definitions of “DAU,” “MAU,” “MUU,” “MUP” and “ABPU”.
MUUs, MUPs and payer conversion in this press release exclude
Rising Tide games (Black Diamond Casino and Vegas Diamond Slots)
for the three months ended June 30, 2016 and exclude Rising Tide
games (Black Diamond Casino and Vegas Diamond Slots) and Zindagi
legacy games for the three months ended March 31, 2016 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,
including those statements relating to our outlook for the third
quarter of 2016 under the heading “Third Quarter Outlook” and
statements relating to, among other things: our continuing to make
great progress in our turnaround; and our ability to tighten our
operating model and improve our cost management as we do more with
less, particularly in marketing.
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 June 30, 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 June 30, 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 June 30, 2016
(which is included as Exhibit 99.1 to our Current Report on Form
8-K, filed with the SEC on August 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 June 30, 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 second quarter of 2016 earnings slides presentation,
dated August 4, 2016, a copy of which may be obtained by visiting
our Investor Relations web site at http://investor.zynga.com and
(iv) our second quarter of 2016 shareholder letter, dated August 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 and non-GAAP net income (loss) do not include
the impact of stock-based expense, acquisition-related transaction
expenses, contingent consideration fair value adjustments 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 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.
Key Financial Metrics
We regularly review a number of metrics, including the following
key financial and operating metrics, to evaluate our business,
measure our performance, identify trends in our business, prepare
financial projections and make strategic decisions. Bookings.
Bookings is a non-GAAP financial measure that is equal to revenue
recognized during the period plus the change in deferred revenue
during the period. We record the sale of virtual goods as deferred
revenue and then recognize that revenue over the estimated average
life of the purchased virtual goods or as the virtual goods are
consumed. Advertising sales, which consist of certain branded
virtual goods and sponsorships, are also deferred and recognized
over the estimated average life of the branded virtual good,
similar to online game revenue. Bookings, as opposed to revenue, is
the fundamental top-line metric we use to manage our business, as
we believe it is a useful indicator of the sales activity in a
given period. Over the long term, the factors impacting our
bookings and revenue are the same. However, in the short term,
there are factors that may cause revenue to exceed or be less than
bookings in any period. We use bookings to evaluate the results of
our operations, generate future operating plans and assess the
performance of our company.
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure
that we calculate as net income (loss), adjusted for provision for
(benefit from) income taxes; other income (expense), net; interest
income; gain (loss) from significant legal settlements;
restructuring expense, net; depreciation and amortization;
impairment of intangible assets; stock-based expense; contingent
consideration fair value adjustments; acquisition-related
transaction expenses, and change in deferred revenue. We believe
that adjusted EBITDA provides useful information to investors and
others in understanding and evaluating our operating results in the
same manner as our management and board of directors.
ZYNGA INC.CONSOLIDATED
BALANCE SHEETS(In thousands,
unaudited)
|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
2016 |
|
|
2015 |
|
| Assets |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
828,388 |
|
|
$ |
742,217 |
|
| Marketable securities |
|
|
40,050 |
|
|
|
245,033 |
|
| Accounts receivable |
|
|
65,074 |
|
|
|
79,610 |
|
| Income tax receivable |
|
|
1,949 |
|
|
|
5,233 |
|
| Restricted cash |
|
|
2,081 |
|
|
|
209 |
|
| Other current assets |
|
|
28,135 |
|
|
|
39,988 |
|
| Total current assets |
|
|
965,677 |
|
|
|
1,112,290 |
|
| |
|
|
|
|
|
|
|
|
| Goodwill |
|
|
627,760 |
|
|
|
657,671 |
|
| Other intangible assets,
net |
|
|
50,263 |
|
|
|
64,016 |
|
| Property and equipment,
net |
|
|
269,769 |
|
|
|
273,221 |
|
| Restricted cash |
|
|
250 |
|
|
|
986 |
|
| Other long-term
assets |
|
|
30,694 |
|
|
|
16,446 |
|
| Total assets |
|
$ |
1,944,413 |
|
|
$ |
2,124,630 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
11,900 |
|
|
$ |
29,676 |
|
| Other current liabilities |
|
|
62,199 |
|
|
|
77,691 |
|
| Deferred revenue |
|
|
116,765 |
|
|
|
128,839 |
|
| Total current
liabilities |
|
|
190,864 |
|
|
|
236,206 |
|
| Deferred revenue |
|
|
100 |
|
|
|
204 |
|
| Deferred tax
liabilities |
|
|
5,962 |
|
|
|
6,026 |
|
| Other non-current
liabilities |
|
|
79,531 |
|
|
|
95,293 |
|
| Total liabilities |
|
|
276,457 |
|
|
|
337,729 |
|
| |
|
|
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Common stock and
additional paid in capital |
|
|
3,297,066 |
|
|
|
3,234,551 |
|
| Treasury stock |
|
|
— |
|
|
|
(98,942 |
) |
| Accumulated other
comprehensive income (loss) |
|
|
(100,518 |
) |
|
|
(52,388 |
) |
| Accumulated deficit |
|
|
(1,528,592 |
) |
|
|
(1,296,320 |
) |
| Total stockholders’
equity |
|
|
1,667,956 |
|
|
|
1,786,901 |
|
| Total liabilities and
stockholders’ equity |
|
$ |
1,944,413 |
|
|
$ |
2,124,630 |
|
| |
|
|
|
|
|
|
|
|
ZYNGA INC.CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per
share data, unaudited)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
June 30, 2016 |
|
|
March 31, 2016 |
|
|
June 30, 2015 |
|
|
June 30, 2016 |
|
|
June 30, 2015 |
|
| Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Online game |
|
$ |
135,823 |
|
|
$ |
137,057 |
|
|
$ |
162,161 |
|
|
$ |
272,880 |
|
|
$ |
310,124 |
|
| Advertising and other |
|
|
45,912 |
|
|
|
49,664 |
|
|
|
37,757 |
|
|
|
95,576 |
|
|
|
73,087 |
|
| Total revenue |
|
|
181,735 |
|
|
|
186,721 |
|
|
|
199,918 |
|
|
|
368,456 |
|
|
|
383,211 |
|
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue |
|
|
56,103 |
|
|
|
57,139 |
|
|
|
57,779 |
|
|
|
113,242 |
|
|
|
115,401 |
|
| Research and development |
|
|
66,233 |
|
|
|
87,737 |
|
|
|
90,896 |
|
|
|
153,970 |
|
|
|
198,416 |
|
| Sales and marketing |
|
|
40,631 |
|
|
|
46,344 |
|
|
|
41,119 |
|
|
|
86,975 |
|
|
|
72,958 |
|
| General and administrative |
|
|
25,374 |
|
|
|
22,384 |
|
|
|
37,805 |
|
|
|
47,758 |
|
|
|
78,186 |
|
| Total costs and
expenses |
|
|
188,341 |
|
|
|
213,604 |
|
|
|
227,599 |
|
|
|
401,945 |
|
|
|
464,961 |
|
| Income (loss) from
operations |
|
|
(6,606 |
) |
|
|
(26,883 |
) |
|
|
(27,681 |
) |
|
|
(33,489 |
) |
|
|
(81,750 |
) |
| Interest income |
|
|
761 |
|
|
|
705 |
|
|
|
605 |
|
|
|
1,466 |
|
|
|
1,399 |
|
| Other income (expense),
net |
|
|
1,905 |
|
|
|
2,100 |
|
|
|
1,199 |
|
|
|
4,005 |
|
|
|
9,558 |
|
| Income (loss) before
income taxes |
|
|
(3,940 |
) |
|
|
(24,078 |
) |
|
|
(25,877 |
) |
|
|
(28,018 |
) |
|
|
(70,793 |
) |
| Provision for (benefit
from) income taxes |
|
|
506 |
|
|
|
2,480 |
|
|
|
991 |
|
|
|
2,986 |
|
|
|
2,571 |
|
| Net income (loss) |
|
$ |
(4,446 |
) |
|
$ |
(26,558 |
) |
|
$ |
(26,868 |
) |
|
$ |
(31,004 |
) |
|
$ |
(73,364 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.08 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares used
to compute net income (loss) per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
|
873,393 |
|
|
|
871,093 |
|
|
|
911,699 |
|
|
|
872,243 |
|
|
|
905,058 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based expense included in the
above line items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of revenue |
|
$ |
1,127 |
|
|
$ |
649 |
|
|
$ |
772 |
|
|
$ |
1,776 |
|
|
$ |
1,844 |
|
| Research and development |
|
|
20,213 |
|
|
|
24,203 |
|
|
|
19,860 |
|
|
|
44,416 |
|
|
|
48,177 |
|
| Sales and marketing |
|
|
2,206 |
|
|
|
1,991 |
|
|
|
1,617 |
|
|
|
4,197 |
|
|
|
3,136 |
|
| General and administrative |
|
|
3,353 |
|
|
|
2,765 |
|
|
|
5,656 |
|
|
|
6,118 |
|
|
|
16,210 |
|
| Total stock-based expense |
|
$ |
26,899 |
|
|
$ |
29,608 |
|
|
$ |
27,905 |
|
|
$ |
56,507 |
|
|
$ |
69,367 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(In thousands,
unaudited)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
June 30, 2016 |
|
|
March 31, 2016 |
|
|
June 30, 2015 |
|
|
June 30, 2016 |
|
|
June 30, 2015 |
|
| Operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(4,446 |
) |
|
$ |
(26,558 |
) |
|
$ |
(26,868 |
) |
|
$ |
(31,004 |
) |
|
$ |
(73,364 |
) |
| Adjustments to reconcile
net income (loss) to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and
amortization |
|
|
10,835 |
|
|
|
10,812 |
|
|
|
13,340 |
|
|
|
21,647 |
|
|
|
31,062 |
|
| Stock-based expense |
|
|
26,899 |
|
|
|
29,608 |
|
|
|
27,905 |
|
|
|
56,507 |
|
|
|
69,367 |
|
| (Gain) loss from sales of
investments, assets and other, net |
|
|
231 |
|
|
|
11 |
|
|
|
406 |
|
|
|
242 |
|
|
|
(5,650 |
) |
| Accretion and amortization
on marketable securities |
|
|
52 |
|
|
|
259 |
|
|
|
1,797 |
|
|
|
311 |
|
|
|
3,884 |
|
| Deferred income taxes |
|
|
148 |
|
|
|
1,422 |
|
|
|
243 |
|
|
|
1,570 |
|
|
|
1,241 |
|
| Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts receivable,
net |
|
|
7,319 |
|
|
|
7,217 |
|
|
|
(3,233 |
) |
|
|
14,536 |
|
|
|
6,857 |
|
| Income tax receivable |
|
|
177 |
|
|
|
595 |
|
|
|
(331 |
) |
|
|
772 |
|
|
|
(1,529 |
) |
| Other assets |
|
|
(2,630 |
) |
|
|
(1,812 |
) |
|
|
(1,105 |
) |
|
|
(4,442 |
) |
|
|
(8,792 |
) |
| Accounts payable |
|
|
(1,498 |
) |
|
|
(12,818 |
) |
|
|
11,699 |
|
|
|
(14,316 |
) |
|
|
12,762 |
|
| Deferred revenue |
|
|
(7,082 |
) |
|
|
(5,096 |
) |
|
|
(25,457 |
) |
|
|
(12,178 |
) |
|
|
(41,340 |
) |
| Other liabilities |
|
|
(15,459 |
) |
|
|
(6,945 |
) |
|
|
5,806 |
|
|
|
(22,404 |
) |
|
|
(37,298 |
) |
| Net cash provided by (used
in) operating activities |
|
|
14,546 |
|
|
|
(3,305 |
) |
|
|
4,202 |
|
|
|
11,241 |
|
|
|
(42,800 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchases of marketable
securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(101,091 |
) |
| Sales and maturities of
marketable securities |
|
|
85,902 |
|
|
|
118,900 |
|
|
|
256,112 |
|
|
|
204,802 |
|
|
|
490,667 |
|
| Acquisition of property
and equipment |
|
|
(1,293 |
) |
|
|
(2,654 |
) |
|
|
(3,127 |
) |
|
|
(3,947 |
) |
|
|
(5,239 |
) |
| Business acquisitions, net
of cash acquired |
|
|
(1,720 |
) |
|
|
(12,500 |
) |
|
|
— |
|
|
|
(14,220 |
) |
|
|
— |
|
| Proceeds from sale of
property and equipment |
|
|
1,179 |
|
|
|
398 |
|
|
|
— |
|
|
|
1,577 |
|
|
|
— |
|
| Proceeds from sale of
equity method investment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,507 |
|
| Net cash provided by (used
in) investing activities |
|
|
84,068 |
|
|
|
104,144 |
|
|
|
252,985 |
|
|
|
188,212 |
|
|
|
394,844 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Taxes paid related to net
share settlement of equity awards |
|
|
(746 |
) |
|
|
(919 |
) |
|
|
(405 |
) |
|
|
(1,665 |
) |
|
|
(1,413 |
) |
| Repurchases of common
stock |
|
|
— |
|
|
|
(112,392 |
) |
|
|
— |
|
|
|
(112,392 |
) |
|
|
— |
|
| Proceeds from employee
stock purchase plan and exercise of stock options |
|
|
409 |
|
|
|
2,476 |
|
|
|
945 |
|
|
|
2,885 |
|
|
|
4,335 |
|
| Acquisition-related
contingent consideration payment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,790 |
) |
| Net cash provided by (used
in) financing activities |
|
|
(337 |
) |
|
|
(110,835 |
) |
|
|
540 |
|
|
|
(111,172 |
) |
|
|
(7,868 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effect of exchange rate
changes on cash and cash equivalents |
|
|
(1,340 |
) |
|
|
(770 |
) |
|
|
246 |
|
|
|
(2,110 |
) |
|
|
(51 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in
cash and cash equivalents |
|
|
96,937 |
|
|
|
(10,766 |
) |
|
|
257,973 |
|
|
|
86,171 |
|
|
|
344,125 |
|
| Cash and cash equivalents,
beginning of period |
|
|
731,451 |
|
|
|
742,217 |
|
|
|
217,455 |
|
|
|
742,217 |
|
|
|
131,303 |
|
| Cash and cash equivalents,
end of period |
|
$ |
828,388 |
|
|
$ |
731,451 |
|
|
$ |
475,428 |
|
|
$ |
828,388 |
|
|
$ |
475,428 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC.RECONCILIATION
OF GAAP TO NON-GAAP RESULTS(In thousands, except
per share data, unaudited)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
June 30, 2016 |
|
|
March 31, 2016 |
|
|
June 30, 2015 |
|
|
June 30, 2016 |
|
|
June 30, 2015 |
|
| Reconciliation of
Revenue to Bookings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
181,735 |
|
|
$ |
186,721 |
|
|
$ |
199,918 |
|
|
$ |
368,456 |
|
|
$ |
383,211 |
|
| Change in deferred
revenue |
|
|
(7,082 |
) |
|
|
(5,096 |
) |
|
|
(25,456 |
) |
|
|
(12,178 |
) |
|
|
(41,339 |
) |
|
Bookings |
|
$ |
174,653 |
|
|
$ |
181,625 |
|
|
$ |
174,462 |
|
|
$ |
356,278 |
|
|
$ |
341,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
Net income (loss) to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(4,446 |
) |
|
$ |
(26,558 |
) |
|
$ |
(26,868 |
) |
|
$ |
(31,004 |
) |
|
$ |
(73,364 |
) |
| Provision for (benefit
from) income taxes |
|
|
506 |
|
|
|
2,480 |
|
|
|
991 |
|
|
|
2,986 |
|
|
|
2,571 |
|
| Other income (expense),
net |
|
|
(1,905 |
) |
|
|
(2,100 |
) |
|
|
(1,199 |
) |
|
|
(4,005 |
) |
|
|
(9,558 |
) |
| Interest income |
|
|
(761 |
) |
|
|
(705 |
) |
|
|
(605 |
) |
|
|
(1,466 |
) |
|
|
(1,399 |
) |
| Restructuring expense,
net |
|
|
1,710 |
|
|
|
468 |
|
|
|
12,855 |
|
|
|
2,178 |
|
|
|
16,316 |
|
| Depreciation and
amortization |
|
|
10,835 |
|
|
|
10,812 |
|
|
|
13,340 |
|
|
|
21,647 |
|
|
|
31,062 |
|
| Acquisition-related
transaction expenses |
|
|
199 |
|
|
|
— |
|
|
|
— |
|
|
|
199 |
|
|
|
— |
|
| Contingent consideration
fair value adjustment |
|
|
(14,390 |
) |
|
|
2,030 |
|
|
|
— |
|
|
|
(12,360 |
) |
|
|
9,400 |
|
| Stock-based expense |
|
|
26,899 |
|
|
|
29,608 |
|
|
|
27,905 |
|
|
|
56,507 |
|
|
|
69,367 |
|
| Change in deferred
revenue |
|
|
(7,082 |
) |
|
|
(5,096 |
) |
|
|
(25,456 |
) |
|
|
(12,178 |
) |
|
|
(41,339 |
) |
| Adjusted
EBITDA |
|
$ |
11,565 |
|
|
$ |
10,939 |
|
|
$ |
963 |
|
|
$ |
22,504 |
|
|
$ |
3,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
Net income (loss) to Non-GAAP net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(4,446 |
) |
|
$ |
(26,558 |
) |
|
$ |
(26,868 |
) |
|
$ |
(31,004 |
) |
|
$ |
(73,364 |
) |
| Restructuring expense,
net |
|
|
1,710 |
|
|
|
468 |
|
|
|
12,855 |
|
|
|
2,178 |
|
|
$ |
16,316 |
|
| Amortization of intangible
assets from acquisitions |
|
|
7,465 |
|
|
|
7,379 |
|
|
|
6,160 |
|
|
|
14,844 |
|
|
$ |
12,424 |
|
| Acquisition-related
transaction expenses |
|
|
199 |
|
|
|
— |
|
|
|
— |
|
|
|
199 |
|
|
$ |
— |
|
| Contingent consideration
fair value adjustment |
|
|
(14,390 |
) |
|
|
2,030 |
|
|
|
— |
|
|
|
(12,360 |
) |
|
$ |
9,400 |
|
| Stock-based expense |
|
|
26,899 |
|
|
|
29,608 |
|
|
|
27,905 |
|
|
|
56,507 |
|
|
$ |
69,367 |
|
| Change in deferred
revenue |
|
|
(7,082 |
) |
|
|
(5,096 |
) |
|
|
(25,456 |
) |
|
|
(12,178 |
) |
|
$ |
(41,339 |
) |
| Tax effect of non-GAAP
adjustments to net income (loss) |
|
|
(8,800 |
) |
|
|
(6,278 |
) |
|
|
(2,174 |
) |
|
|
(15,078 |
) |
|
$ |
(7,095 |
) |
| Non-GAAP net
income (loss) |
|
$ |
1,555 |
|
|
$ |
1,553 |
|
|
$ |
(7,578 |
) |
|
$ |
3,108 |
|
|
$ |
(14,291 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP diluted
shares |
|
|
873,393 |
|
|
|
871,093 |
|
|
|
911,699 |
|
|
|
872,243 |
|
|
|
905,058 |
|
| Non-GAAP diluted
shares |
|
|
893,636 |
|
|
|
882,350 |
|
|
|
911,699 |
|
|
|
891,849 |
|
|
|
905,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP earnings
(loss) per share: |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
|
$ |
0.00 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
Cash provided by operating activities to free cash
flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by (used
in) operating activities |
|
|
14,546 |
|
|
|
(3,305 |
) |
|
|
4,202 |
|
|
|
11,241 |
|
|
|
(42,800 |
) |
| Acquisition of property
and equipment |
|
|
(1,293 |
) |
|
|
(2,654 |
) |
|
|
(3,127 |
) |
|
|
(3,947 |
) |
|
|
(5,239 |
) |
| Free cash
flow |
|
$ |
13,253 |
|
|
$ |
(5,959 |
) |
|
$ |
1,075 |
|
|
$ |
7,294 |
|
|
$ |
(48,039 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reconciliation of
GAAP to Non-GAAP provision for (benefit from) income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP provision for
(benefit from) income taxes |
|
|
506 |
|
|
|
2,480 |
|
|
|
991 |
|
|
|
2,986 |
|
|
|
2,571 |
|
| Restructuring expense,
net |
|
|
582 |
|
|
|
85 |
|
|
|
1,369 |
|
|
|
667 |
|
|
|
1,750 |
|
| Amortization of intangible
assets from acquisitions |
|
|
3,203 |
|
|
|
1,347 |
|
|
|
643 |
|
|
|
4,550 |
|
|
|
1,332 |
|
| Acquisition-related
transaction expenses |
|
|
61 |
|
|
|
— |
|
|
|
— |
|
|
|
61 |
|
|
|
— |
|
| Contingent consideration
fair value adjustment |
|
|
(4,159 |
) |
|
|
371 |
|
|
|
— |
|
|
|
(3,788 |
) |
|
|
1,035 |
|
| Stock-based expense |
|
|
11,916 |
|
|
|
5,405 |
|
|
|
2,847 |
|
|
|
17,321 |
|
|
|
7,411 |
|
| Change in deferred
revenue |
|
|
(2,803 |
) |
|
|
(930 |
) |
|
|
(2,685 |
) |
|
|
(3,733 |
) |
|
|
(4,433 |
) |
| Non-GAAP provision
for (benefit from) income taxes |
|
$ |
9,306 |
|
|
$ |
8,758 |
|
|
$ |
3,165 |
|
|
$ |
18,064 |
|
|
$ |
9,666 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC.RECONCILIATION
OF GAAP TO NON-GAAP THIRD QUARTER 2016 OUTLOOK(In
thousands, except per share data, unaudited)
|
|
|
Third Quarter 2016 |
|
| Reconciliation of
Revenue to Bookings |
|
|
|
|
| Revenue range |
$ |
170,000 - 180,000 |
|
| Change in deferred
revenue |
|
|
10,000 |
|
| Bookings
range |
$ |
180,000 - 190,000 |
|
| |
|
|
|
|
| Reconciliation of
Net income (loss) to Adjusted EBITDA |
|
|
|
|
| Net income (loss)
range |
$ |
(33,000) - (29,000) |
|
| Provision for (benefit
from) income taxes |
|
0 - 2,000 |
|
| Other income (expense),
net |
|
|
|
|
|
(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 |
$ |
12,000 - 16,000 |
|
| |
|
|
|
|
| Reconciliation of
Net income (loss) to Non-GAAP net income (loss) |
|
|
|
|
| Net income (loss)
range |
$ |
(33,000) - (29,000) |
|
| 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) |
|
(6,000) - (7,000) |
|
| Non-GAAP net
income (loss) range |
$ |
5,000 - 6,000 |
|
| |
|
|
|
|
| GAAP diluted
shares |
|
|
880,000 |
|
| Non-GAAP diluted
shares |
|
|
901,000 |
|
| Net income (loss)
per share range |
$ |
(0.04) - (0.03) |
|
| Non-GAAP earnings
(loss) per share range |
$ |
|
0.01 |
|
| |
|
|
|
|
CONTACTS
Investor Relations investorrelations@zynga.com
Stephanie HessVice President of
Communicationsshess@zynga.com
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