Delivered Results Above Guidance Range
With $190.5M in Revenue and $201.5M in Bookings
Zynga Inc. (NASDAQ:ZNGA), a leading social game developer, today
announced financial results for the fourth quarter and full year
ended December 31, 2016. In addition to today’s press release,
a copy of our Q4 2016 Quarterly Earnings Letter, which outlines our
Q4 and full year 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 to discuss Zynga’s Q4 and full
year 2016 performance.
“We had a strong Q4 and made significant progress this year in
our turnaround and we’re encouraged by the fundamentals of our
business as we head into 2017. We’re pleased with the performance
of our live services and the quality of our new releases as we
improved profitability and continued to sharpen our operating
model,” said Frank Gibeau, CEO of Zynga. “We rallied around our
company mission to connect the world through games and create the
highest quality social experiences for our players. Our renewed
commitment to our live operations is paying off with Zynga Poker
and Words With Friends delivering outstanding revenue and
bookings. We improved our quality and predictability,
launching all games in our 2016 slate including two new
NaturalMotion titles – CSR2 and Dawn of Titans – which we expect to
be long term mobile franchises for us.”
“In Q4 we delivered another strong quarter with GAAP revenues of
$190.5 million, above the high end of our guidance range, up 3%
year-over-year and GAAP Net Loss was $35.4 million, below our
guidance range but an improvement of 31% year-over-year. Our
topline performance was driven by better than expected mobile
bookings from Zynga Poker and CSR2, offset by correspondingly
higher revenue deferrals. GAAP operating expenses were $162.4
million, down 8.5% year-over-year. Non-GAAP operating expenses were
$126.3 million, down 3.1% year-over-year and in line with our
expectations resulting in higher operating leverage in the quarter.
Our Adjusted EBITDA, which includes the change in deferred revenue,
was $10.6 million, $1.4 million below our guidance range, due to
the negative impact of higher revenue deferrals. Overall, our
strong business performance delivered operating cash flow of $27.7
million, up $24.3 million year-over-year,” said Ger Griffin, CFO of
Zynga.
Fourth Quarter 2016 Financial Highlights
- GAAP Revenue of $190.5 million; above the high end of the
guidance range, up 3% year-over-year and up 4% sequentially
- GAAP Operating Expenses of $162.4 million, down 9%
year-over-year and down 2% sequentially
- GAAP Net Loss of $35.4 million, below our guidance range but an
improvement of $15.8 million or 31% year-over-year, and $6.3
million or 15% sequentially
- Deferred revenue increased by $11.0 million; $6 million above
our guidance
- Bookings of $201.5 million; above the high end of the guidance
range, up 11% year-over-year and up 2% sequentially
- Non-GAAP operating expenses of $126.3 million were in line with
our expectations; down 3% year-over-year and flat sequentially,
driven by lower sales and marketing spend
- Adjusted EBITDA, which includes the impact of changes in
deferred revenue, of $10.6 million; below our guidance range
primarily due to the platform fees associated with the higher
revenue deferrals
- Operating cash flow of $27.7 million, up $24.3 million
year-over-year and up $6.7 million sequentially
2016 Annual Financial Highlights
- GAAP Revenue of $741.4 million, down $23.3 million or 3%
year-over-year
- GAAP Net Loss of $108.2 million, an improvement of $13.3
million or 11% year-over-year
- Deferred revenues increased $13.1 million compared to a release
of $64.8 million in 2015 representing a $77.9 million swing
year-over-year
- Bookings of $754.5 million, up $54.6 million or 8%
year-over-year
- Adjusted EBITDA, which includes the impact of changes in
deferred revenue, was $48.8 million, down $33.0 million or 40%
year-over-year with strong operational performance in 2016 more
than offset by the swing in deferred revenue year-over-year
- Operating cash flow of $60.0 million, a $104.5 million increase
compared to 2015 and our best performance since 2012
Mobile Highlights
- Mobile revenue of $154.7 million or 81% of overall revenue; up
20% year-over-year and up 6% sequentially
- Mobile bookings of $167.1 million or 83% of overall bookings;
up 25% year-over-year and up 3% sequentially
- Average Mobile Daily Active Users (mobile DAUs) of 16 million;
up 5% year-over-year and flat sequentially
- Apple and Google continue to be our two largest platform
partners for online game bookings
|
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Three Months Ended |
|
|
Twelve Months Ended |
|
(in thousands, except
per share data) |
|
December 31, 2016 |
|
|
September 30, 2016 |
|
|
December 31, 2015 |
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|
December 31, 2016 |
|
|
December 31, 2015 |
|
GAAP
Results |
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|
|
|
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|
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|
|
|
|
Revenue |
|
$ |
190,540 |
|
|
$ |
182,424 |
|
|
$ |
185,769 |
|
|
$ |
741,420 |
|
|
$ |
764,717 |
|
Net income (loss) |
|
$ |
(35,432 |
) |
|
$ |
(41,737 |
) |
|
$ |
(51,198 |
) |
|
$ |
(108,173 |
) |
|
$ |
(121,510 |
) |
Diluted net income
(loss) per share |
|
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
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Non-GAAP
Results |
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|
|
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Bookings |
|
$ |
201,532 |
|
|
$ |
196,723 |
|
|
$ |
182,104 |
|
|
$ |
754,533 |
|
|
$ |
699,955 |
|
Adjusted EBITDA(1) |
|
$ |
10,584 |
|
|
$ |
3,580 |
|
|
$ |
5,321 |
|
|
$ |
48,846 |
|
|
$ |
81,889 |
|
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(1) In compliance with SEC Compliance and Disclosure
Interpretations released May 17, 2016, Zynga's methodology for
computing Adjusted EBITDA includes the change in deferred
revenue. This methodology has been applied also for prior
periods reported in this release previously reported without
inclusion of deferred revenue.
Player Metrics (users and payers in
millions)
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Three Months Ended |
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December 31, |
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|
September 30, |
|
|
December 31, |
|
|
Q4'16 |
|
|
Q4'16 |
|
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
Q/Q |
|
|
Y/Y |
|
Average daily active
users (DAUs) |
|
|
18 |
|
|
|
18 |
|
|
|
18 |
|
|
|
(1 |
)% |
|
|
1 |
% |
Average mobile
DAUs |
|
|
16 |
|
|
|
16 |
|
|
|
15 |
|
|
|
0 |
% |
|
|
5 |
% |
Average web DAUs |
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
|
(4 |
)% |
|
|
(18 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average monthly active
user (MAUs) |
|
|
63 |
|
|
|
66 |
|
|
|
68 |
|
|
|
(4 |
)% |
|
|
(7 |
)% |
Average mobile
MAUs |
|
|
53 |
|
|
|
56 |
|
|
|
55 |
|
|
|
(5 |
)% |
|
|
(5 |
)% |
Average web MAUs |
|
|
10 |
|
|
|
10 |
|
|
|
13 |
|
|
|
2 |
% |
|
|
(18 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Average daily bookings
per average DAU (ABPU) |
|
$ |
0.120 |
|
|
$ |
0.116 |
|
|
$ |
0.110 |
|
|
|
3 |
% |
|
|
9 |
% |
Average monthly unique
users (MUUs)(1) |
|
|
56 |
|
|
|
57 |
|
|
|
48 |
|
|
|
(1 |
)% |
|
|
16 |
% |
Average monthly unique
payers (MUPs)(1) |
|
|
1.2 |
|
|
|
1.3 |
|
|
|
0.8 |
|
|
|
(6 |
)% |
|
|
50 |
% |
Payer
conversion(1) |
|
|
2.2 |
% |
|
|
2.3 |
% |
|
|
1.7 |
% |
|
|
(5 |
)% |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
|
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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 third and
fourth quarters of 2016, Vegas Diamond Slots and Daily Celebrity
Crossword are excluded from MUUs, MUPs, and payer conversion. For
the fourth quarter of 2015, CSR Racing, CSR Classics and Clumsy
Ninja are excluded from MUUs, MUPs and payer conversion.
Fourth Quarter 2016 Financial Summary
- Revenue: Revenue was $191 million for the
fourth quarter of 2016, an increase of 4% compared to the third
quarter of 2016 and an increase of 3% compared to the fourth
quarter of 2015. Online game revenue was $140 million, an increase
of 4% compared to the third quarter of 2016 and an increase of 8%
compared to the fourth quarter of 2015. Advertising and other
revenue was $51 million, an increase of 5% compared to the third
quarter of 2016 and a decrease of 11% compared to the fourth
quarter of 2015. Zynga Poker, Hit It Rich! Slots and Wizard of Oz
Slots accounted for 20%, 11% and 10% of online game revenue,
respectively, for the fourth quarter of 2016 while Zynga Poker,
FarmVille 2, Hit It Rich! Slots and Wizard of Oz Slots, accounted
for 18%, 17%, 17% and 15%, respectively, for the fourth quarter of
2015.
- Change in deferred revenue: The change in
deferred revenue was $11 million from the third quarter of 2016 to
the fourth quarter of 2016.
- Bookings: Bookings were $202 million for the
fourth quarter of 2016, an increase of 2% compared to the third
quarter of 2016 and an increase of 11% compared to the fourth
quarter of 2015. The quarter-over-quarter increase in bookings was
primarily due to higher bookings from Zynga Poker mobile and
FarmVille: Tropic Escape and the launch of Dawn of Titans in
December 2016.
- Net income (loss): Net loss was ($35) million
for the fourth quarter of 2016, compared to net loss of ($42)
million for the third quarter of 2016 and net loss of ($51) million
for the fourth quarter of 2015. The quarter-over-quarter change in
net loss was primarily due to $21 million of impairment on
intangible assets recorded in the third quarter of 2016.
- Adjusted EBITDA: Adjusted EBITDA, which
includes the impact of changes in deferred revenue, was $11 million
for the fourth quarter of 2016, compared to $4 million in the third
quarter of 2016 and $5 million for the fourth quarter of 2015. The
quarter-over-quarter change in Adjusted EBITDA was due to higher
revenue and lower marketing spend, offset by an increase in
headcount-related expenses and an increase in mobile payment
processing fees.
- Net income (loss) per share: Diluted net
income (loss) per share was ($0.04) for the fourth quarter of 2016,
compared to ($0.05) for the third quarter of 2016 and $(0.06) for
the fourth quarter of 2015.
- Cash and cash flow: As of December 31,
2016, cash, cash equivalents and marketable securities were
approximately $852 million, compared to $987 million as of December
31, 2015. In the fourth quarter of 2016, we repurchased 12 million
shares of our Class A common stock at a weighted average price of
$2.76 per share for a total of $34 million. Cash flow from
operations was $28 million for the fourth quarter of 2016, compared
to $21 million for the third quarter of 2016 and $3 million for the
fourth quarter of 2015. Free cash flow was $24 million for the
fourth quarter of 2016 compared to $18 million for the third
quarter of 2016 and $3 million for the fourth quarter of 2015.
2016 Annual Financial Summary
- Revenue: Revenue was $741 million in 2016, a
decrease of 3% on a year-over-year basis. Online game revenue was
$547 million, a decrease of 7% on a year-over-year basis.
Advertising and other revenue was $194 million, an increase of 12%
on a year-over-year basis.
- Change in deferred revenue: The change in
deferred revenue was $13 million from 2015 to 2016.
- Bookings: Bookings were $755 million in 2016,
an increase of 8% on a year-over-year basis. The year-over-year
increase in bookings was primarily due to the bookings contribution
from new game launches in 2016 (namely CSR Racing 2, Black Diamond
Casino and Willy Wonka and the Chocolate Factory Slots) in addition
to strong performance from Words With Friends.
- Net income (loss): Net loss was ($108) million
in 2016, which included $107 million of stock-based expense and $21
million of impairment on intangible assets, compared to net loss of
($122) million in 2015.
- Adjusted EBITDA: Adjusted EBITDA, which
includes the impact of changes in deferred revenue, was $49 million
in 2016 compared to $82 million in 2015, a decrease of 40%
year-over-year, primarily due to an increase in mobile payment
processing fees and higher marketing spend, offset by a lower third
party hosting costs due to our data center migration and lower
third party consulting costs.
- Net income (loss) per share: Diluted net loss
per share was ($0.12) for 2016, compared to diluted net loss per
share of ($0.13) for 2015.
- Cash and cash flow: As of December 31, 2016,
cash, cash equivalents and marketable securities were approximately
$852 million, compared to $987 million as of December 31, 2015. In
the first quarter of 2016, we repurchased 42 million shares of our
Class A common stock at a weighted average price of $2.40 for a
total of $102 million. In the fourth quarter of 2016, we
repurchased 12 million shares of our Class A common stock at a
weighted average price of $2.76 per share for a total of $34
million. Cash flow from operations was $60 million for 2016,
compared to ($44) million for 2015. Free cash flow was $50 million
for 2016 compared to ($51) million for 2015.
First Quarter Outlook
Zynga’s outlook for the first quarter of 2017 is as follows:
GAAP:
- Revenue is projected to be $185 million
- Net loss is projected to be ($16) million
- Net loss per share is projected to be ($0.02) based on a
projected share count of approximately 881 million shares
- The change in deferred revenue is projected to be $5
million
Non-GAAP:
- Bookings are projected to be $190 million
- Adjusted EBITDA, which includes in the impact of the changes in
deferred revenue, is projected to be $14 million
In addition to today’s press release, a copy of our Q4 2016
Quarterly Earnings Letter, which outlines our Q4 2016 financial
results and business outlook, is available on our website at
http://investor.zynga.com.
Conference Call Details
Zynga management will also host a live Q&A session
at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time)
on February 9 to discuss the Company's fourth quarter and
full year 2016 performance. Questions may be asked on the call, 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: 52592710
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, California, and has
additional offices in the U.S., Canada, U.K., Ireland, Finland and
India. Learn more about Zynga at http://blog.zynga.com or
follow us on Twitter and Facebook.
Key Operating and Financial Metrics
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 September 30, 2016 and, when filed, our Annual
Report on Form 10-K for the year ended December 31,
2016, for our definitions of “DAU,” “MAU,” “MUU,” “MUP” and
“ABPU”.
Financial Metrics. We regularly review a number of key
financial metrics, including the following 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.
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; and acquisition-related
transaction expenses. Zynga’s methodology for computing Adjusted
EBITDA includes the impact of the changes in deferred revenue.
Forward Looking Statements
This press release contains forward-looking statements,
including those statements relating to our outlook for the first
quarter of 2017 under the heading “First Quarter Outlook” and
statements relating to, among other things: our progress in our
turnaround, our ability to grow our live services and create
forever franchises, our ability to sharpen our operating model and
deliver product, financial and operating performance, and our
expectations with respect to new products and features.
Forward-looking statements often include words such as
“outlook,” “projected,” “intends,” “will,” “anticipate,” “believe,”
“target,” “expect,” and statements in the future tense are
generally forward-looking. The achievement or success of the
matters covered by such forward-looking statements involves
significant risks, uncertainties, and assumptions. Our actual
results could differ materially from those predicted or implied and
reported results should not be considered as an indication of our
future performance. Undue reliance should not be placed on
such forward-looking statements, which are based on information
available to us on the date hereof. We assume no obligation
to update such statements.
More information about factors that could affect our operating
results are described in greater detail in our public filings with
the Securities and Exchange Commission (the “SEC”), 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.
In addition, the preliminary financial results set forth in this
release are estimates based on information currently available to
us. While we believe these estimates are meaningful, they could
differ from the actual amounts that we ultimately report in our
Annual Report on Form 10-K for the year ended December 31, 2016. We
assume no obligation and do not intend to update these estimates
prior to filing our Annual Report on Form 10-K for the year ended
December 31, 2016.
Non-GAAP Financial Measures
We have provided in this press release certain non-GAAP
financial measures to supplement our consolidated financial
statements prepared in accordance with GAAP (our “GAAP financial
statements”). Management uses 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 our 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 our non-GAAP financial measures
in assessing our performance and when planning, forecasting and
analyzing future periods. We believe our non-GAAP financial
measures are useful to investors because they allow for greater
transparency with respect to key financial metrics we use in making
operating decisions and because our investors and analysts use them
to help assess the health of our business.
We have provided reconciliations of our non-GAAP financial
measures used in this press release to the most directly comparable
GAAP financial measures in the tables below.
Because of the following limitations of our non-GAAP financial
measures, you should consider the non-GAAP financial measures
presented in this press release with our GAAP financial statements.
Some limitations of our non-GAAP financial measures include:
- Adjusted EBITDA does not include the impact of stock-based
expense, acquisition-related transaction expenses, contingent
consideration fair value adjustments and restructuring
expense;
- Bookings does 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. 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.
|
ZYNGA INC. |
CONSOLIDATED BALANCE SHEETS |
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
852,467 |
|
|
$ |
742,217 |
|
Marketable securities |
|
|
— |
|
|
|
245,033 |
|
Accounts
receivable |
|
|
77,260 |
|
|
|
79,610 |
|
Income
tax receivable |
|
|
296 |
|
|
|
5,233 |
|
Restricted cash |
|
|
6,199 |
|
|
|
209 |
|
Other
current assets |
|
|
29,254 |
|
|
|
39,988 |
|
Total current
assets |
|
|
965,476 |
|
|
|
1,112,290 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
613,335 |
|
|
|
657,671 |
|
Other intangible
assets, net |
|
|
25,430 |
|
|
|
64,016 |
|
Property and equipment,
net |
|
|
269,439 |
|
|
|
273,221 |
|
Restricted cash |
|
|
3,050 |
|
|
|
986 |
|
Other long-term
assets |
|
|
29,119 |
|
|
|
16,446 |
|
Total assets |
|
$ |
1,905,849 |
|
|
$ |
2,124,630 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
23,999 |
|
|
$ |
29,676 |
|
Income
tax payable |
|
|
1,889 |
|
|
|
— |
|
Other
current liabilities |
|
|
75,754 |
|
|
|
77,691 |
|
Deferred
revenue |
|
|
141,998 |
|
|
|
128,839 |
|
Total current
liabilities |
|
|
243,640 |
|
|
|
236,206 |
|
Deferred revenue |
|
|
158 |
|
|
|
204 |
|
Deferred tax
liabilities |
|
|
5,791 |
|
|
|
6,026 |
|
Other non-current
liabilities |
|
|
75,596 |
|
|
|
95,293 |
|
Total liabilities |
|
|
325,185 |
|
|
|
337,729 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Common stock and
additional paid in capital |
|
|
3,349,714 |
|
|
|
3,234,551 |
|
Treasury stock |
|
|
— |
|
|
|
(98,942 |
) |
Accumulated other
comprehensive income (loss) |
|
|
(128,694 |
) |
|
|
(52,388 |
) |
Accumulated
deficit |
|
|
(1,640,356 |
) |
|
|
(1,296,320 |
) |
Total stockholders’
equity |
|
|
1,580,664 |
|
|
|
1,786,901 |
|
Total liabilities and
stockholders’ equity |
|
$ |
1,905,849 |
|
|
$ |
2,124,630 |
|
|
|
|
|
|
|
|
|
|
ZYNGA INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share data,
unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, 2016 |
|
|
September 30, 2016 |
|
|
December 31, 2015 |
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online
game |
|
$ |
140,157 |
|
|
$ |
134,254 |
|
|
$ |
129,463 |
|
|
$ |
547,291 |
|
|
$ |
590,755 |
|
Advertising and other |
|
|
50,383 |
|
|
|
48,170 |
|
|
|
56,306 |
|
|
|
194,129 |
|
|
|
173,962 |
|
Total revenue |
|
|
190,540 |
|
|
|
182,424 |
|
|
|
185,769 |
|
|
|
741,420 |
|
|
|
764,717 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
|
|
62,629 |
|
|
|
62,675 |
|
|
|
63,397 |
|
|
|
238,546 |
|
|
|
235,985 |
|
Research
and development |
|
|
92,417 |
|
|
|
73,913 |
|
|
|
85,099 |
|
|
|
320,300 |
|
|
|
361,931 |
|
Sales and
marketing |
|
|
46,860 |
|
|
|
49,802 |
|
|
|
53,066 |
|
|
|
183,637 |
|
|
|
169,573 |
|
General
and administrative |
|
|
23,095 |
|
|
|
21,656 |
|
|
|
39,333 |
|
|
|
92,509 |
|
|
|
143,284 |
|
Impairment of intangible assets |
|
|
— |
|
|
|
20,677 |
|
|
|
— |
|
|
|
20,677 |
|
|
|
— |
|
Total costs and
expenses |
|
|
225,001 |
|
|
|
228,723 |
|
|
|
240,895 |
|
|
|
855,669 |
|
|
|
910,773 |
|
Income (loss) from
operations |
|
|
(34,461 |
) |
|
|
(46,299 |
) |
|
|
(55,126 |
) |
|
|
(114,249 |
) |
|
|
(146,056 |
) |
Interest income |
|
|
791 |
|
|
|
800 |
|
|
|
603 |
|
|
|
3,057 |
|
|
|
2,568 |
|
Other income (expense),
net |
|
|
1,476 |
|
|
|
980 |
|
|
|
1,463 |
|
|
|
6,461 |
|
|
|
13,306 |
|
Income (loss) before
income taxes |
|
|
(32,194 |
) |
|
|
(44,519 |
) |
|
|
(53,060 |
) |
|
|
(104,731 |
) |
|
|
(130,182 |
) |
Provision for (benefit
from) income taxes |
|
|
3,238 |
|
|
|
(2,782 |
) |
|
|
(1,862 |
) |
|
|
3,442 |
|
|
|
(8,672 |
) |
Net income (loss) |
|
$ |
(35,432 |
) |
|
$ |
(41,737 |
) |
|
$ |
(51,198 |
) |
|
$ |
(108,173 |
) |
|
$ |
(121,510 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.13 |
) |
Diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares used to compute net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
888,272 |
|
|
|
882,408 |
|
|
|
922,540 |
|
|
|
878,827 |
|
|
|
913,511 |
|
Diluted |
|
|
888,272 |
|
|
|
882,408 |
|
|
|
922,540 |
|
|
|
878,827 |
|
|
|
913,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based expense included in the above line items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
|
$ |
895 |
|
|
$ |
1,049 |
|
|
$ |
1,712 |
|
|
$ |
3,720 |
|
|
$ |
4,547 |
|
Research
and development |
|
|
21,158 |
|
|
|
18,662 |
|
|
|
24,063 |
|
|
|
84,236 |
|
|
|
94,548 |
|
Sales and
marketing |
|
|
1,516 |
|
|
|
1,541 |
|
|
|
2,320 |
|
|
|
7,254 |
|
|
|
7,501 |
|
General
and administrative |
|
|
2,910 |
|
|
|
3,223 |
|
|
|
3,677 |
|
|
|
12,251 |
|
|
|
24,979 |
|
Total
stock-based expense |
|
$ |
26,479 |
|
|
$ |
24,475 |
|
|
$ |
31,772 |
|
|
$ |
107,461 |
|
|
$ |
131,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands, unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, 2016 |
|
|
September 30, 2016 |
|
|
December 31, 2015 |
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
Operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(35,432 |
) |
|
$ |
(41,737 |
) |
|
$ |
(51,198 |
) |
|
$ |
(108,173 |
) |
|
$ |
(121,510 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
9,612 |
|
|
|
10,511 |
|
|
|
11,966 |
|
|
|
41,770 |
|
|
|
54,315 |
|
Stock-based
expense |
|
|
26,479 |
|
|
|
24,475 |
|
|
|
31,772 |
|
|
|
107,461 |
|
|
|
131,575 |
|
(Gain) loss from sales
of investments, assets and other, net |
|
|
(134 |
) |
|
|
(82 |
) |
|
|
725 |
|
|
|
26 |
|
|
|
(5,558 |
) |
Tax benefits (costs)
from stock-based awards |
|
|
— |
|
|
|
— |
|
|
|
899 |
|
|
|
— |
|
|
|
989 |
|
Excess tax benefits
(costs) from stock-based awards |
|
|
— |
|
|
|
— |
|
|
|
(899 |
) |
|
|
— |
|
|
|
(989 |
) |
Accretion and
amortization on marketable securities |
|
|
1 |
|
|
|
11 |
|
|
|
770 |
|
|
|
323 |
|
|
|
5,711 |
|
Deferred income
taxes |
|
|
746 |
|
|
|
(4,304 |
) |
|
|
(3,542 |
) |
|
|
(1,988 |
) |
|
|
(12,693 |
) |
Impairment of
intangible assets |
|
|
— |
|
|
|
20,677 |
|
|
|
— |
|
|
|
20,677 |
|
|
|
— |
|
Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
net |
|
|
(4,909 |
) |
|
|
(5,793 |
) |
|
|
7,604 |
|
|
|
3,834 |
|
|
|
10,148 |
|
Income tax
receivable |
|
|
714 |
|
|
|
939 |
|
|
|
(217 |
) |
|
|
2,425 |
|
|
|
(1,929 |
) |
Other assets |
|
|
(2,407 |
) |
|
|
1,923 |
|
|
|
(4,307 |
) |
|
|
(4,926 |
) |
|
|
(16,167 |
) |
Accounts payable |
|
|
6,558 |
|
|
|
4,145 |
|
|
|
(1,292 |
) |
|
|
(3,613 |
) |
|
|
10,934 |
|
Deferred revenue |
|
|
10,992 |
|
|
|
14,299 |
|
|
|
(3,665 |
) |
|
|
13,113 |
|
|
|
(64,762 |
) |
Income tax payable |
|
|
1,889 |
|
|
|
— |
|
|
|
— |
|
|
|
1,889 |
|
|
|
— |
|
Other liabilities |
|
|
13,634 |
|
|
|
(4,032 |
) |
|
|
14,849 |
|
|
|
(12,802 |
) |
|
|
(34,511 |
) |
Net cash provided by
(used in) operating activities |
|
|
27,743 |
|
|
|
21,032 |
|
|
|
3,465 |
|
|
|
60,016 |
|
|
|
(44,447 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of marketable
securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(101,091 |
) |
Sales and maturities
of marketable securities |
|
|
4,500 |
|
|
|
35,535 |
|
|
|
165,181 |
|
|
|
244,837 |
|
|
|
867,198 |
|
Acquisition of property
and equipment |
|
|
(3,692 |
) |
|
|
(2,674 |
) |
|
|
(985 |
) |
|
|
(10,313 |
) |
|
|
(7,832 |
) |
Business acquisitions,
net of cash acquired |
|
|
— |
|
|
|
(19,410 |
) |
|
|
— |
|
|
|
(33,630 |
) |
|
|
(20,023 |
) |
Proceeds from sale of
property and equipment |
|
|
174 |
|
|
|
1,458 |
|
|
|
64 |
|
|
|
3,209 |
|
|
|
814 |
|
Proceeds from sale of
equity method investment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,507 |
|
Net cash provided by
(used in) investing activities |
|
|
982 |
|
|
|
14,909 |
|
|
|
164,260 |
|
|
|
204,103 |
|
|
|
749,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes paid related to
net share settlement of equity awards |
|
|
(1,259 |
) |
|
|
(498 |
) |
|
|
(1,036 |
) |
|
|
(3,422 |
) |
|
|
(2,902 |
) |
Repurchases of common
stock |
|
|
(30,204 |
) |
|
|
— |
|
|
|
(88,409 |
) |
|
|
(142,596 |
) |
|
|
(88,409 |
) |
Proceeds from employee
stock purchase plan and exercise of stock options |
|
|
351 |
|
|
|
2,685 |
|
|
|
275 |
|
|
|
5,921 |
|
|
|
7,567 |
|
Excess tax benefits
(costs) from stock-based awards |
|
|
— |
|
|
|
— |
|
|
|
899 |
|
|
|
— |
|
|
|
989 |
|
Acquisition-related
contingent consideration payment |
|
|
(10,230 |
) |
|
|
— |
|
|
|
— |
|
|
|
(10,230 |
) |
|
|
(10,790 |
) |
Net cash provided by
(used in) financing activities |
|
|
(41,342 |
) |
|
|
2,187 |
|
|
|
(88,271 |
) |
|
|
(150,327 |
) |
|
|
(93,545 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(1,235 |
) |
|
|
(197 |
) |
|
|
(257 |
) |
|
|
(3,542 |
) |
|
|
(667 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease)
in cash and cash equivalents |
|
|
(13,852 |
) |
|
|
37,931 |
|
|
|
79,197 |
|
|
|
110,250 |
|
|
|
610,914 |
|
Cash and cash
equivalents, beginning of period |
|
|
866,319 |
|
|
|
828,388 |
|
|
|
663,020 |
|
|
|
742,217 |
|
|
|
131,303 |
|
Cash and cash
equivalents, end of period |
|
$ |
852,467 |
|
|
$ |
866,319 |
|
|
$ |
742,217 |
|
|
$ |
852,467 |
|
|
$ |
742,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC. |
RECONCILIATION OF GAAP TO NON-GAAP
RESULTS |
(In thousands, except per share data,
unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, 2016 |
|
|
September 30, 2016 |
|
|
December 31, 2015 |
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
Reconciliation
of Revenue to Bookings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
190,540 |
|
|
$ |
182,424 |
|
|
$ |
185,769 |
|
|
$ |
741,420 |
|
|
$ |
764,717 |
|
Change in deferred
revenue |
|
|
10,992 |
|
|
|
14,299 |
|
|
|
(3,665 |
) |
|
|
13,113 |
|
|
|
(64,762 |
) |
Bookings |
|
$ |
201,532 |
|
|
$ |
196,723 |
|
|
$ |
182,104 |
|
|
$ |
754,533 |
|
|
$ |
699,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net income (loss) to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(35,432 |
) |
|
$ |
(41,737 |
) |
|
$ |
(51,198 |
) |
|
$ |
(108,173 |
) |
|
$ |
(121,510 |
) |
Provision for (benefit
from) income taxes |
|
|
3,238 |
|
|
|
(2,782 |
) |
|
|
(1,862 |
) |
|
|
3,442 |
|
|
|
(8,672 |
) |
Other income (expense),
net |
|
|
(1,476 |
) |
|
|
(980 |
) |
|
|
(1,463 |
) |
|
|
(6,461 |
) |
|
|
(13,306 |
) |
Interest income |
|
|
(791 |
) |
|
|
(800 |
) |
|
|
(603 |
) |
|
|
(3,057 |
) |
|
|
(2,568 |
) |
Restructuring expense,
net |
|
|
(191 |
) |
|
|
(49 |
) |
|
|
19,748 |
|
|
|
1,938 |
|
|
|
36,480 |
|
Depreciation and
amortization |
|
|
9,612 |
|
|
|
10,511 |
|
|
|
11,966 |
|
|
|
41,770 |
|
|
|
54,315 |
|
Acquisition-related
transaction expenses |
|
|
— |
|
|
|
75 |
|
|
|
249 |
|
|
|
274 |
|
|
|
1,144 |
|
Contingent
consideration fair value adjustment |
|
|
9,145 |
|
|
|
(5,810 |
) |
|
|
(3,288 |
) |
|
|
(9,025 |
) |
|
|
6,112 |
|
Gain (loss) on legal
settlements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,681 |
) |
Impairment of
intangible assets |
|
|
— |
|
|
|
20,677 |
|
|
|
— |
|
|
|
20,677 |
|
|
|
— |
|
Stock-based
expense |
|
|
26,479 |
|
|
|
24,475 |
|
|
|
31,772 |
|
|
|
107,461 |
|
|
|
131,575 |
|
Adjusted
EBITDA |
|
$ |
10,584 |
|
|
$ |
3,580 |
|
|
$ |
5,321 |
|
|
$ |
48,846 |
|
|
$ |
81,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Cash provided by operating activities to free cash
flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities |
|
|
27,743 |
|
|
|
21,032 |
|
|
|
3,465 |
|
|
|
60,016 |
|
|
|
(44,447 |
) |
Acquisition of property
and equipment |
|
|
(3,692 |
) |
|
|
(2,674 |
) |
|
|
(985 |
) |
|
|
(10,313 |
) |
|
|
(7,832 |
) |
Excess tax benefits
(costs) from stock-based awards |
|
|
— |
|
|
|
— |
|
|
|
899 |
|
|
|
— |
|
|
|
989 |
|
Free cash
flow |
|
$ |
24,051 |
|
|
$ |
18,358 |
|
|
$ |
3,379 |
|
|
$ |
49,703 |
|
|
$ |
(51,290 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZYNGA INC. |
RECONCILIATION OF GAAP TO NON-GAAP FIRST
QUARTER 2017 OUTLOOK |
(In thousands, except per share data,
unaudited) |
|
|
|
|
|
|
First Quarter 2017 |
|
Reconciliation
of Revenue to Bookings |
|
|
|
|
Revenue |
$ |
|
185,000 |
|
|
Change in deferred
revenue |
|
|
5,000 |
|
|
Bookings |
$ |
|
190,000 |
|
|
|
|
|
|
|
Reconciliation
of Net income (loss) to Adjusted EBITDA |
|
|
|
|
Net income (loss) |
$ |
(16,000 |
) |
|
Provision for (benefit
from) income taxes |
|
|
3,500 |
|
|
Other income (expense),
net |
|
(1,500 |
) |
|
Interest income |
|
(1,000 |
) |
|
Depreciation and
amortization |
|
|
8,000 |
|
|
Stock-based
expense |
|
|
21,000 |
|
|
Adjusted
EBITDA |
$ |
|
14,000 |
|
|
|
|
|
|
|
GAAP diluted
shares |
|
|
881,000 |
|
|
Net income
(loss) per share |
$ |
(0.02 |
) |
|
|
|
|
|
|
CONTACTS
Rebecca Lau investorrelations@zynga.com
Stephanie HessVice President of
Communicationsshess@zynga.com
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