Zynga Announces Second Quarter 2014 Financial Results
DELIVERS $175M IN BOOKINGS AND $14M IN ADJUSTED EBITDA
Company Lowers Outlook for Full Year 2014; Continues Significant Investment in Future Pipeline
Announces Entrance into Sports Category and Multi-Year Licensing Agreements with the National Football League, NFL Players Inc. and Tiger Woods
Expands Presence in Runner Category Through Multi-Year Agreement with Warner Bros. Interactive Entertainment to License Looney Tunes
SAN FRANCISCO, Aug. 7, 2014 (GLOBE NEWSWIRE) -- Zynga Inc. (Nasdaq:ZNGA), a leading social game developer, today announced financial results for the second quarter ended June 30, 2014.
"While our quarterly financial results were in line with our guidance range, we aspire to do better and improve execution across our business. Inside Zynga, we recognize that our products have the potential to live for multiple years and with nurturing, refinement and investment, they can grow and scale. We are purposefully competing, and while we would like to be further along, we believe we are making the right decisions to grow our business and unlock long term shareholder value," said Don Mattrick, CEO of Zynga. "We continue to make significant investments in the highest potential areas of our future pipeline. By Q4 of this year, approximately half of our game-related research and development will be allocated to new and recently launched games -- this represents about a 45% increase year over year. We currently have capabilities and brands in content genres with Farm, Words, Casino, Racing and People and we are further diversifying our product portfolio in order to reach more consumers and widen our demographic across more entertainment genres."
Recent Business Highlights
-- Generated bookings of $175 million, Adjusted EBITDA of $14 million and
Non-GAAP net income of $3 million
-- Achieved sequential growth in bookings, Adjusted EBITDA, mobile bookings
mix and mobile audience for the second consecutive quarter
-- Delivered mobile audience growth at 22 percent quarter over quarter
across monthly active users and 12 percent across daily active users
-- Zynga lowers outlook for full year 2014 primarily to reflect the delayed
launch of new games and features
Quarter Product Highlights
-- Launched FarmVille 2: Country Escape in 16 languages across iOS and
Android on April 17, 2014. At launch, the game received Apple App Store
"Editor's Choice" featuring in 155 countries and Google Play top tier
featuring in 71 countries
-- Zynga partnered with A&ENetwork(R)'s Duck Dynasty series to expand its
branded social casino experience with the June launch of Duck Dynasty
Slots on iPhone, iPad and Google Play
-- NaturalMotion expanded CSR Classics and Clumsy Ninja to additional
platforms by launching on Google Play
-- NaturalMotion released Morpheme 6 and Morpheme 6 with Euphoria as the
next generation of its innovative animation system
Three Months Ended Six Months Ended
---------------------------- ----------------------------
June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013
------------- ------------- ------------- -------------
GAAP Results
Revenue $ 153,232 $ 230,735 $ 321,252 $ 494,324
Net loss $ (62,533) $ (15,805) $ (123,716) $ (11,672)
Diluted net loss
per share $ (0.07) $ (0.02) $ (0.14) $ (0.01)
Non-GAAP Results
Bookings $ 175,102 $ 187,578 $ 336,460 $ 417,393
Adjusted EBITDA $ 14,491 $ 8,310 $ 28,337 $ 37,045
Non-GAAP net
income (loss) $ 2,808 $ (6,129) $ (3,450) $ 2,976
Non-GAAP earnings
(loss) per share $ 0.00 $ (0.01) $ 0.00 $ 0.00
Zynga Enters into the Sports Category
Today, Zynga announced it is entering the Sports category. Sports represents one of the largest evergreen consumer categories in entertainment, and as a first step in the genre Zynga is currently developing mobile games in both football and golf, which will live under a new franchise brand -- Zynga Sports 365.
Starting with football, today Zynga announced multi-year licensing agreements with the National Football League and NFL Players Inc., the licensing and marketing arm of the NFL Players Association. These licenses will enable Zynga to bring real NFL teams and athletes, including their names and likeness, to players, creating an authentic team manager football experience that can be enjoyed anytime, anywhere.
Zynga's new football game -- NFL Showdown -- went live today in geo-lock and is currently available in select markets. The game is a manager-style mobile simulation game that offers a unique opportunity for football fans to engage with their favorite NFL teams and players 365 days a year, taking on the role of Coach, General Manager and Owner as they manage their team to victory.
Zynga also announced it has signed an exclusive, multi-year, multi-platform partnership with golf icon, Tiger Woods. The agreement will enable Zynga to create breakthrough mobile games that bring the world of Tiger Woods golf to life for consumers. While the product is in its early development, Zynga expects to globally launch the game across mobile platforms in 2015.
Expands Presence in Runner Category
Zynga also announced today that it is expanding its offerings in the Runner category and has entered into a multi-year agreement with Warner Bros. Interactive Entertainment to license the Looney Tunes brand for mobile. Zynga expects to launch its Looney Tunes mobile game before the holiday season.
"Today we are announcing that we are expanding our game development efforts in two new additional categories: Sports and Runner. Our Sports effort introduces a new franchise brand for us -- Zynga Sports 365 -- and with it, new mobile games in football with the NFL and NFL Players Inc. and in golf with one of the most iconic athletes in the world, Tiger Woods. Our Runner expansion features a new partnership with Warner Bros. Interactive Entertainment to bring to life their beloved Looney Tunes brand for mobile consumers. We are pleased to launch the geo-lock for our new football game -- NFL Showdown -- today and look forward to making it, along with our Tiger Woods golf game and Looney Tunes runner game available globally to fans around the world," said Mattrick.
Second Quarter 2014 Operational Metrics
-- Average daily bookings per average DAU (ABPU) increased from $0.053 in
the second quarter of 2013 to $0.067 in the second quarter of 2014, up
28% year-over-year. On a consecutive quarter basis, ABPU was up 7% from
$0.063 in the first quarter of 2014.
-- Monthly Unique Payers (MUPs) in the second quarter of 2014 were 1.7
million, compared to 1.9 million in the second quarter of 2013. On a
consecutive quarter basis, MUPs were up 18% from 1.4 million in the first
quarter of 2014.
-- Daily active users (DAUs) in the second quarter of 2014 were 29 million,
compared to 39 million in the second quarter of 2013. On a consecutive
quarter basis, DAUs were up 0.4% from 28 million in the first quarter of
2014.
-- Monthly active users (MAUs) in the second quarter of 2014 were 130
million, compared to 187 million in the second quarter of 2013. On a
consecutive quarter basis, MAUs were up 6% from 123 million in the first
quarter of 2014.
-- Monthly unique users (MUUs) in the second quarter of 2014 were 89 million,
compared to 123 million in the second quarter of 2013. On a consecutive
quarter basis, MUUs were up 2% from 86 million in the first quarter of
2014.
Second Quarter 2014 Financial Summary
-- Revenue: Revenue was $153 million for the second quarter of 2014, a
decrease of 34% compared to the second quarter of 2013 and a decrease of
9% compared to the first quarter of 2014. Online game revenue was $131
million, a decrease of 36% compared to the second quarter of 2013 and a
decrease of 1% compared to the first quarter of 2014. Advertising and
other revenue was $22 million, a decrease of 19% compared to the second
quarter of 2013 and a decrease of 38% compared to the first quarter of
2014. FarmVille 2 and Zynga Poker accounted for 32% and 24% of online
game revenue, respectively, for the second quarter of 2014 compared to
30% and 24%, respectively, for the first quarter of 2014.
-- Bookings: Bookings were $175 million for the second quarter of 2014, a
decrease of 7% compared to the second quarter of 2013 and an increase of
9% compared to the first quarter of 2014.
-- Net loss: Net loss was $63 million for the second quarter of 2014,
compared to net loss of $16 million for the second quarter of 2013 and
compared to net loss of $61 million for the first quarter of 2014.
-- Adjusted EBITDA: Adjusted EBITDA was $14 million for the second quarter
of 2014 compared to $8 million for the second quarter of 2013 and $14
million in the first quarter of 2014.
-- Non-GAAP net income (loss): Non-GAAP net income was $3 million for the
second quarter of 2014, compared to non-GAAP net loss of $6 million in
the second quarter of 2013 and non-GAAP net loss of $6 million in the
first quarter of 2014.
-- Net loss per share: Diluted net loss per share was $0.07 for the second
quarter of 2014 compared to a diluted net loss per share of $0.02 for the
second quarter of 2013 and diluted net loss of $0.07 for the first
quarter of 2014.
-- Non-GAAP EPS: Non-GAAP earnings (loss) per share was $0.00 for the second
quarter of 2014 compared to ($0.01) for the second quarter of 2013 and
($0.01) for the first quarter of 2014.
-- Cash and cash flow: As of June 30, 2014, cash, cash equivalents and
marketable securities were approximately $1.15 billion, compared to $1.14
billion as of March 31, 2014. Cash flow from operations was $18 million
for the second quarter of 2014, compared to ($0.6) million for the second
quarter of 2013 and ($24) million for the first quarter of 2014. Free
cash flow was $14 million for the second quarter of 2014 compared to
($14) million for the second quarter of 2013 and ($25) million for the
first quarter of 2014.
Q3 2014 and Full Year Outlook
Zynga's outlook for the third quarter of 2014 is as follows:
-- Revenue is projected to be in the range of $160 million to $170 million
-- Net loss is projected to be in the range of $57 million to $52 million
-- Diluted net loss per share is projected to be $0.06, based on a share
count of approximately 885 million shares
-- Bookings are projected to be in the range of $165 million to $175 million
-- Adjusted EBITDA is projected to be in the range of $0 million 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 of approximately 885 million shares
Zynga's revised outlook for 2014 is as follows:
-- Bookings are projected to be in the range of $695 million to $725 million,
compared to previous expectation between $770 million to $810 million
-- Adjusted EBITDA is projected to be in the range of $40 million to $60
million, compared to previous expectation between $70 million to $100
million
-- Non-GAAP EPS is projected to be in the range of ($0.01) to $0.00, based
on a share count projected to be in the range of approximately
874 million to 912 million shares.
Conference Call Details
Zynga will host a conference call today, August 7, 2014, at 2:00 pm PDT (5:00 pm EDT) to discuss financial results. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of the company's website at http://ift.tt/PdnPlH and a replay will be archived and accessible at the same website after the call.
About Zynga Inc.
Zynga Inc. is a leading developer of the world's most popular social games that are played by more than 100 million 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, Calif. Learn more about Zynga at http://blog.zynga.com or follow us on Twitter and Facebook.
Key Operating Metrics
Please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 for definitions of "DAU," "MAU," "MUU," "MUP" and "ABPU."
MUUs and MUPs in this press release exclude MUUs and MUPs from NaturalMotion as the necessary data is not yet available.
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. The operating metrics described above are recorded by our internal analytics systems. The numbers for these operating metrics are calculated using internal company data based on tracking the activity of user accounts. 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.
Forward-Looking Statements
This press release contains forward-looking statements relating to, among other things, our outlook for the third quarter 2014 revenue, net loss, diluted net loss per share, weighted average diluted share count, bookings, Adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share and non-GAAP weighted average diluted share count; full year 2014 bookings, Adjusted EBITDA and Non-GAAP EPS; certain other financial items necessary for GAAP to Non-GAAP reconciliation; our future spend, including R&D and marketing spend; our future operational and strategic plans; the process of integrating NaturalMotion's operations into our operations, including but not limited to our expected ability to expand our creative pipeline, accelerate our mobile growth and fast track our ability to deliver more hit games; the planned launch of mobile first games and new features for existing games in the second half of this year, including planned launches from our Words and Casino franchises and in the Sports and Runner content categories; the evergreen potential of the Sports and Runner content categories; our entry into, or expanded game offerings in, new evergreen content categories, the evergreen potential of these categories, the timely launch of games in these categories and the success of these games; our ability to develop, identify, market and launch hit games for mobile and web on schedule; our ability to monetize these games; our ability to retain key employees in light of business challenges, including employees key to franchise games and planned launches; our ability to grow and sustain our franchise games, including through launching new features in a timely manner; the impact of our new hires on our organization and other changes to our personnel and roles; the continuing impact of our cost reduction plan; our ability to strengthen and sustain the core of our business and achieve future growth across all of our key metrics including audience, bookings, Adjusted EBITDA and mobile bookings mix; our ability to successfully transition our business to take advantage of the market opportunity in our industry; the success of FarmVille 2: Country Escape; our ability to manage new IP costs; our ability to deliver compelling entertainment experiences and our ability to efficiently deploy employees and leverage our teams and talent, including shifting resources where necessary to prioritize more important projects. Forward-looking statements often include words such as "outlook," "projected," "intends," "will," "anticipate," "believe," "target," "expect," and statements in the future tense are generally forward-looking statements. The achievement or success of the matters covered by such forward-looking statements involves significant risks, uncertainties, and assumptions. Our actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of our future performance. Factors that could cause or contribute to such differences include, but are not limited to, the ability of key games, including our franchise games to sustain or grow audience and bookings, our relationship with Facebook or changes in the Facebook platform, our relationship and or agreements with iOS and Android platform providers and/or changes in the Android or iOS platforms, our relationship and/or agreements with key licensing partners, the integration of our NaturalMotion acquisition and the success of its current and future games as part of Zynga, delays or challenges in implementing cost-cutting activities, attrition and declines in our existing games, our ability to launch new games and features in a timely manner and monetize these games and features effectively on the web and on mobile, including the planned features and games for our existing franchises and our planned launches in the Sports and Runner categories, the effectiveness of our marketing program, our ability to successfully identify new evergreen content categories and launch games that will capture the market potential of these categories, our ability to control and reduce expenses, our exposure to illegitimate credit card activity and other security risks, sales or purchases of virtual goods used in Zynga Poker or our other games through unauthorized or fraudulent third-party websites, our ability to anticipate and address technical challenges that may arise, competition, changing interests of players, intellectual property disputes or other litigation, asset impairment charges, our ability to retain key employees and retain and attract new talent, acquisitions by us, and changes in corporate strategy or management.
More information about factors that could affect our operating results is included under the captions "Annual 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, 2013 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, copies of which may be obtained by visiting our Investor Relations web site at http://ift.tt/PdnPlH or the SEC's web site at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to us on the date hereof. There is no guarantee that the circumstances described in our forward-looking statements will occur. We assume no obligation to update such statements. The results we report in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 could differ from the preliminary results we have announced in this press release.
Non-GAAP Financial Measures
We have provided in this release non-GAAP financial information including bookings, Adjusted EBITDA, free cash flow, non-GAAP net income and non-GAAP effective tax rate outlook to GAAP effective tax rate or non-GAAP EPS, as a supplement to the consolidated financial statements, which are prepared in accordance with generally accepted accounting principles ("GAAP"). Management uses these non-GAAP financial measures internally in analyzing our financial results to assess operational performance and liquidity. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with GAAP. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key financial metrics we use in making operating decisions and because our investors and analysts use them to help assess the health of our business. We have provided reconciliations between our historical and third quarter 2014 outlook for non-GAAP financial measures to the most directly comparable GAAP financial measures. However, we have not provided reconciliation of full year 2014 bookings outlook to revenue, Adjusted EBITDA outlook to net income (loss), or non-GAAP EPS outlook to GAAP EPS because certain reconciling items necessary to accurately project revenue (including the projected mix of virtual goods sold in our games, and the projected estimated average lives of durable virtual goods for our games) for a full year are not in our control and cannot be reasonably projected due to variability from period to period caused by changes in player behavior and other factors. As revenue and/or net income for the applicable future period is a necessary input to determine all of these comparable GAAP figures, we are not able to provide these reconciliations for the full year 2014.
Some limitations of bookings, Adjusted EBITDA, non-GAAP net income, non-GAAP EPS, and free cash flow:
-- Adjusted EBITDA and non-GAAP net income (loss) do not include the impact
of stock-based expense, asset impairment charges, acquisition-related
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 virtual goods
or as virtual goods are consumed;
-- Adjusted EBITDA does not reflect income tax expense;
-- Adjusted EBITDA does not include other income and expense, which includes
foreign exchange gains and losses and interest income;
-- Adjusted EBITDA excludes both depreciation and amortization of intangible
assets, while non-GAAP net income excludes amortization of intangible
assets from acquisitions. Although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized may have to
be replaced in the future;
-- Adjusted EBITDA and non-GAAP net income (loss) do not include gains and
losses associated with significant legal settlements;
-- Non-GAAP EPS gives effect to all dilutive awards based on the treasury
stock method that were excluded from the GAAP diluted earnings per share
calculation in periods when non-GAAP net income (loss) is positive and
GAAP net income (loss) is negative;
-- Free cash flow is derived from net cash provided by operating activities
less cash spent on capital expenditures, and removing the excess income
tax benefits or costs associated with stock-based awards; and
-- Other companies, including companies in our industry, may calculate
bookings, Adjusted EBITDA, non-GAAP net income (loss), non-GAAP EPS and
free cash flow differently or not at all, which will reduce their
usefulness as a comparative measure.
Because of these limitations, you should consider bookings, Adjusted EBITDA, non-GAAP net income (loss), non-GAAP EPS, and free cash flow, along with other financial performance measures, including revenue, net income (loss), diluted net loss per share, cash flow from operations and GAAP operating margin and our other financial results presented in accordance with GAAP. See the GAAP to non-GAAP reconciliations below for further details.
ZYNGA INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
June 30, December 31,
2014 2013
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 135,628 $ 465,523
Marketable securities 591,610 659,973
Accounts receivable 84,005 65,667
Income tax receivable 8,222 6,943
Deferred tax assets 3,698 16,293
Restricted cash 50,550 3,493
Other current assets 28,938 23,507
------------ ------------
Total current assets 902,651 1,241,399
Long-term marketable securities 421,970 416,474
Goodwill 693,814 227,989
Other intangible assets, net 85,893 18,282
Property and equipment, net 317,258 348,793
Other long-term assets 21,021 26,148
------------ ------------
Total assets $ 2,442,607 $ 2,279,085
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 22,942 $ 20,973
Other current liabilities 129,529 68,866
Deferred revenue 199,545 186,663
------------ ------------
Total current liabilities 352,016 276,502
Deferred revenue 5,578 3,252
Deferred tax liabilities 9,568 --
Other non-current liabilities 105,761 122,060
------------ ------------
Total liabilities 472,923 401,814
Stockholders' equity:
Common stock and additional paid in capital 3,022,193 2,823,743
Accumulated other comprehensive income (loss) 17,130 (1,046)
Accumulated deficit (1,069,639) (945,426)
------------ ------------
Total stockholders' equity 1,969,684 1,877,271
------------ ------------
Total liabilities and stockholders' equity $ 2,442,607 $ 2,279,085
============ ============
ZYNGA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
2014 2013 2014 2013
----------- ----------- ------------ -----------
Revenue:
Online game $ 130,966 $ 203,326 $ 263,236 $ 432,892
Advertising 22,266 27,409 58,016 61,432
----------- ----------- ------------ -----------
Total Revenue 153,232 230,735 321,252 494,324
Costs and expenses:
Cost of revenue 51,288 61,077 104,792 130,471
Research and
development 93,722 124,322 191,306 253,503
Sales and marketing 41,608 31,163 71,461 58,470
General and
administrative 32,831 44,541 90,167 87,181
----------- ----------- ------------ -----------
Total costs and expenses 219,449 261,103 457,726 529,625
----------- ----------- ------------ -----------
Income (loss) from
operations (66,217) (30,368) (136,474) (35,301)
Interest income 776 1,105 1,646 2,268
Other income (expense),
net 896 (4,531) 2,021 (5,394)
----------- ----------- ------------ -----------
Income (loss) before
income taxes (64,545) (33,794) (132,807) (38,427)
Provision for (benefit
from) income taxes (2,012) (17,989) (9,091) (26,755)
----------- ----------- ------------ -----------
Net income (loss) $ (62,533) $ (15,805) $ (123,716) $ (11,672)
=========== =========== ============ ===========
Net income (loss) per
share:
Basic and diluted $ (0.07) $ (0.02) $ (0.14) $ (0.01)
=========== =========== ============ ===========
Weighted average
common shares used to
compute net income
(loss) per share:
Basic and diluted 872,784 793,541 861,591 786,784
Stock-based expense
included in the above
line items:
Cost of revenue $ 1,002 $ (1,639) $ 2,281 $ 294
Research and
development 17,596 15,888 36,012 36,788
Sales and marketing 1,860 3,973 3,318 5,386
General and
administrative 8,389 7,666 15,562 13,342
----------- ----------- ------------ -----------
Total stock-based
expense $ 28,847 $ 25,888 $ 57,173 $ 55,810
=========== =========== ============ ===========
ZYNGA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
2014 2013 2014 2013
----------- ----------- ------------ -----------
Operating activities
Net income (loss) $ (62,533) $ (15,805) $ (123,716) $ (11,672)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and
amortization 19,926 30,858 45,270 62,919
Stock-based expense 28,847 25,888 57,173 55,810
Accretion and
amortization on
marketable
securities 2,612 4,729 5,398 9,585
(Gain) loss from sales
of investments,
assets and other,
net 896 3,725 1,278 4,932
Tax benefits from
stock based awards (436) (12,274) -- (10,617)
Excess tax benefits
from stock based
awards 436 12,274 -- 10,617
Deferred income taxes (1,140) (7,909) (9,075) (16,500)
Changes in operating
assets and liabilities:
Accounts receivable,
net (7,495) 19,100 (10,883) 32,909
Income tax receivable (1,413) (185) (1,278) (228)
Other assets (2,600) 3,679 (7,892) 4,527
Accounts payable 10,181 (4,114) 1,584 (1,644)
Deferred revenue 21,870 (43,157) 14,961 (76,931)
Other liabilities 8,655 (17,454) 20,740 (37,907)
----------- ----------- ------------ -----------
Net cash (used in)
provided by operating
activities 17,806 (645) (6,440) 25,800
Investing activities
Purchase of marketable
securities (295,445) (344,998) (470,174) (623,717)
Sales of marketable
securities 19,316 47,508 152,949 146,123
Maturities of marketable
securities 273,478 220,093 373,471 415,161
Acquisition of property
and equipment (3,415) (1,366) (4,649) (6,290)
Proceeds from sale of
property and equipment 121 -- 5,056 --
Business acquisitions,
net of cash acquired -- (18,054) (390,993) (18,054)
Restricted cash -- 60 -- 227
Other investing
activities, net 500 142 700 (661)
----------- ----------- ------------ -----------
Net cash (used in)
investing activities (5,445) (96,615) (333,640) (87,211)
Financing activities
Repurchase of common
stock -- -- -- (2,432)
Taxes paid related to net
share settlement of
equity awards (298) (323) (753) (667)
Proceeds from exercise of
stock options and
warrants 1,414 1,225 7,948 3,618
Proceeds from employee
stock purchase plan -- -- 2,975 3,506
Excess tax benefits from
stock-based awards (436) (12,274) -- (10,617)
Repayment of debt -- (100,000) -- (100,000)
----------- ----------- ------------ -----------
Net cash (used in)
provided by financing
activities 680 (111,372) 10,170 (106,592)
Effect of exchange rate
changes on cash and cash
equivalents 134 (287) 15 (614)
Net increase in cash and
cash equivalents 13,175 (208,919) (329,895) (168,617)
Cash and cash
equivalents, beginning
of period 122,453 426,251 465,523 385,949
----------- ----------- ------------ -----------
Cash and cash
equivalents, end of
period $ 135,628 $ 217,332 $ 135,628 $ 217,332
=========== =========== ============ ===========
ZYNGA INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share data, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
2014 2013 2014 2013
----------- ----------- ------------ -----------
Reconciliation of Revenue
to Bookings
Revenue $ 153,232 $ 230,735 $ 321,252 $ 494,324
Change in deferred
revenue 21,870 (43,157) 15,208 (76,931)
----------- ----------- ------------ -----------
Bookings $ 175,102 $ 187,578 $ 336,460 $ 417,393
=========== =========== ============ ===========
Reconciliation of Net
income (loss) to Adjusted
EBITDA
Net income (loss) $ (62,533) $ (15,805) $ (123,716) $ (11,672)
Provision for (benefit
from) income taxes (2,012) (17,989) (9,091) (26,755)
Other income (expense),
net (896) 4,531 (2,021) 5,394
Interest income (776) (1,105) (1,646) (2,268)
Restructuring expense (2,270) 25,089 27,385 30,548
Depreciation and
amortization 19,926 30,858 45,270 62,919
Contingent consideration
fair value adjustment 12,070 -- 13,350 --
Acquisition-related
transaction expenses 265 -- 6,425 --
Stock-based expense 28,847 25,888 57,173 55,810
Change in deferred
revenue 21,870 (43,157) 15,208 (76,931)
----------- ----------- ------------ -----------
Adjusted EBITDA $ 14,491 $ 8,310 $ 28,337 $ 37,045
=========== =========== ============ ===========
Reconciliation of Net
income (loss) to Non-GAAP
net income (loss)
Net income (loss) $ (62,533) $ (15,805) $ (123,716) $ (11,672)
Contingent consideration
fair value adjustment 12,070 -- 13,350 --
Acquisition-related
transaction expenses 265 -- 6,425 --
Stock-based expense 28,847 25,888 57,173 55,810
Amortization of
intangible assets from
acquisitions 6,591 2,912 9,198 6,570
Change in deferred
revenue 21,870 (43,157) 15,208 (76,931)
Restructuring expense (2,270) 25,089 27,385 30,548
Tax effect of non-GAAP
adjustments to net
income (loss) (2,032) (1,056) (8,473) (1,349)
----------- ----------- ------------ -----------
Non-GAAP net income
(loss) $ 2,808 $ (6,129) $ (3,450) $ 2,976
=========== =========== ============ ===========
Reconciliation of GAAP
diluted shares to
Non-GAAP diluted shares
GAAP diluted shares 872,784 793,541 861,591 786,784
Other dilutive equity
awards (1) 44,109 -- -- 45,496
----------- ----------- ------------ -----------
Non-GAAP diluted shares 916,893 793,541 861,591 832,280
=========== =========== ============ ===========
Non-GAAP net income
(loss) per share: $ 0.00 $ (0.01) $ 0.00 $ 0.00
=========== =========== ============ ===========
Reconciliation of Cash
provided by operating
activities to Free cash
flow
Net cash provided by
operating activities 17,806 (645) (6,440) 25,800
Acquisition of property
and equipment (3,415) (1,366) (4,649) (6,290)
Excess tax benefits
(loss) from stock-based
awards (436) (12,274) -- (10,617)
----------- ----------- ------------ -----------
Free cash flow $ 13,955 $ (14,285) $ (11,089) $ 8,893
=========== =========== ============ ===========
Reconciliation of GAAP to
Non-GAAP provision for
(benefit from) income
taxes
GAAP provision for
(benefit from) income
taxes (2,012) (17,989) (9,091) (26,755)
Stock-based expense 790 2,720 3,763 4,389
Amortization of
intangible assets from
acquisitions 332 313 606 517
Contingent consideration
fair value adjustment 744 -- 878 --
Acquisition-related
transaction expenses (224) -- 423 --
Change in deferred
revenue 1,700 (4,075) 1,001 (5,960)
Restructuring expense (1,310) 2,098 1,802 2,403
----------- ----------- ------------ -----------
Non-GAAP provision for
(benefit from) income
taxes $ 20 $ (16,933) $ (618) $ (25,406)
=========== =========== ============ ===========
(1) Gives effect to all dilutive awards based on the
treasury stock method.
ZYNGA INC.
RECONCILIATION OF GAAP TO NON-GAAP THIRD QUARTER 2014
OUTLOOK
(In thousands, except per share data, unaudited)
Third Quarter 2014
----------------------
Reconciliation of Revenue to Bookings
Revenue range $ 160,000 -- 170,000
Change in deferred revenue 5,000
----------------------
Bookings range $ 165,000 -- 175,000
======================
Reconciliation of Net loss to Adjusted EBITDA
Net loss range $ (57,000) -- (52,000)
Income tax expense --
Other income, net (1,000)
Interest income (1,000)
Depreciation and amortization 19,000
Stock-based expense 35,000
Change in deferred revenue 5,000
----------------------
Adjusted EBITDA range $ 0 -- 5,000
======================
Reconciliation of Net loss to Non-GAAP Net loss
Net loss range $ (57,000) -- (52,000)
Stock-based expense 35,000
Amortization of intangible assets from acquisitions 7,000
Change in deferred revenue 5,000
Tax effect of non-GAAP adjustments to net loss 3,000 -- 2,000
----------------------
Non-GAAP net income (loss) range $ (7,000) -- (3,000)
======================
GAAP and Non-GAAP diluted shares 885,000
Net income (loss) per share $ (0.06)
Non-GAAP net income (loss) per share $ (0.01) -- 0.00
CONTACT: Investors - Darren Yip
415-339-5266
investors@zynga.com
Press - Stephanie Hess
415-503-0303
press@zynga.com
The Wall Street Journal news department was not involved in the creation of this content.
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