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The company's updated outlook for full year 2012 includes:
"The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction," said
Additional details regarding expense reductions and expectations for certain other 2012 financial outlook results, including stock-based expense and non-GAAP EPS, will be updated when the company reports full third quarter financial results on
A discussion of non-GAAP financial measures and reconciliations of third quarter non-GAAP financial measures to the most directly comparable GAAP measures are provided below in this press release. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared in accordance with generally accepted accounting principles ("GAAP").
About
The
Forward-Looking Statements
This press release contains forward-looking statements relating to, among other things, our expectations for third quarter financial results, including revenue, bookings, net loss, non-GAAP net income and adjusted EBITDA, diluted EPS and non-GAAP EPS; our outlook for full year 2012 bookings and adjusted EBITDA; our actions to address near-term challenges, including potential expense reductions; our strategy to transition from being a first party web game developer to a multiplatform game network; and our future operational plans, prospects and opportunities to expand our business. Forward-looking statements often include words such as "outlook," "projected, " "intends," "will," "anticipate," "believe," "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 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, our relationship with Facebook or changes in the Facebook platform or our agreements with Facebook, our ability to launch new games in a timely manner and monetize these games effectively, our ability to anticipate and address technical challenges that may arise, our ability to control and reduce expenses, competition, the changing interests of players, intellectual property disputes or other litigation, asset impairment charges including any income tax impact resulting from our impairment charge related to
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 Quarterly Report on Form 10-Q for the three months ended
Non-GAAP Financial Measures:
We have provided in this release non-GAAP financial information, including bookings, adjusted EBITDA, non-GAAP net income and non-GAAP EPS. 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 preliminary estimated Q3 2012 non-GAAP financial measures to the most directly comparable GAAP measures. However, we have not provided a reconciliation of our bookings outlook to revenue for the full year 2012 or adjusted EBITDA outlook to net income (loss) for the full year 2012 because certain reconciling items necessary to accurately project revenue and net income (loss) (including projected mix of virtual goods sold in our games, the projected estimated average lives of durable virtual goods for our games and the effective tax rate) cannot be reasonably projected due to a number of factors, including variability from in a given period caused by changes in player behavior and other factors. As revenue and/or net income (loss) for future periods is a necessary input to determine all of these comparable GAAP figures, we are not able to provide these reconciliations.
Some limitations of bookings and adjusted EBITDA are:
Because of these limitations, you should consider bookings and adjusted EBITDA along with other financial performance measures, including revenue and our financial results presented in accordance with GAAP. See the GAAP to non-GAAP reconciliation below for further details.
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| RECONCILIATION OF GAAP TO NON-GAAP THIRD QUARTER ESTIMATES | |
| (In thousands, except per share data, unaudited) | |
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Three months ended |
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| Reconciliation of Estimated Revenue to Estimated Bookings | |
| Estimated revenue range |
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| Estimated change in deferred revenue | (50,000) |
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| Reconciliation of Estimated Net Loss to Estimated Adjusted EBITDA | |
| Estimated net loss range |
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| Estimated impairment of intangible assets range | 95,000 — 85,000 |
| Estimated benefit from income taxes | (7,000) |
| Estimated other expense, net | 1,000 |
| Estimated interest income | (1,000) |
| Estimated legal settlements | 1,000 |
| Estimated depreciation and amortization | 39,000 |
| Estimated stock-based expense | 37,000 |
| Estimated change in deferred revenue | (50,000) |
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$ 10,000 — 15,000 |
| Reconciliation of Estimated Net Loss to Estimated Non-GAAP Net Loss | |
| Estimated net loss range |
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| Estimated impairment of intangible assets range | 95,000 — 85,000 |
| Estimated stock-based expense | 37,000 |
| Estimated amortization of intangible assets from acquisitions | 14,000 |
| Estimated change in deferred revenue | (50,000) |
| Estimated legal settlements | 1,000 |
| Estimated tax effect of Non-GAAP adjustments to net loss range | 3,000 — 1,000 |
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| Estimated GAAP and Non-GAAP Diluted Shares | 750,000 — 760,000 |
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$ (0.14) — (0.12) |
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CONTACT: Investors -Krista Bessinger 415-339-5266 investors@zynga.com Press -Stephanie Hess 415-503-0303 press@zynga.com
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