Zynga Announces Fourth Quarter and 2013 Financial Results
- Delivers Full Year 2013 Profitability on an Adjusted EBITDA Basis and Beats Q4 Outlook
- Charts Course for Growth in 2014
- Announces Agreement to Acquire Leading Mobile Game Developer NaturalMotion, Creator of Hit Mobile Games
- Announces Cost Reduction Plan
Conference Call Today at
Recent Business Highlights
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Outperforms high end of Q4 2013 outlook with bookings of
$147M and Adjusted EBITDA of$3M -
Agrees to acquire leading mobile game and technology developer, NaturalMotion; expanding
Zynga's creative pipeline, accelerating planned mobile growth, and bringing in next-generation technology and tools -
Begins to implement 15% global workforce reduction and expand cost savings plan; expects to generate approximately
$33 to$35 million in pre-tax savings for 2014 -
Achieves victory in patent lawsuit resulting in unanimous verdict of non-infringement in
Zynga's favor
Recent Product Highlights
- Words With Friends franchise achieved 33% sequential quarterly growth in bookings, delivering the highest quarterly bookings in the game's five year history
-
Zynga's Casino franchise achieved sequential quarterly growth in bookings for the first time in the past 18 months; Zynga Poker grew mobile monthly active users 8% sequentially - Launched new mobile slots product, Hit It Rich! on tablet; currently #1 on the free iPad charts in the Casino category
"Over the last 7 months, our teams have been working with a sense of urgency. We finished 2013 in a strong position and expect 2014 to be a growth year. We believe that Q1 will be a solid foundation for that growth and we expect substantial improvements for the remainder of the year across audience, bookings and Adjusted EBITDA. The investments we are making to grow and sustain our franchises are beginning to bear fruit, particularly in
| Financial Highlights (in thousands, except per share data) | ||||
| Quarter ended | Year ended | |||
|
2013 |
2012 |
2013 |
2012 |
|
| GAAP Results | ||||
| Revenue | $ 176,362 | $ 311,165 | $ 873,266 | $ 1,281,267 |
| Net income (loss) | $ (25,242) | $ (48,561) | $ (36,982) | $ (209,448) |
| Diluted net income (loss) per share | $ (0.03) | $ (0.06) | $ (0.05) | $ (0.28) |
| Non-GAAP Results | ||||
| Bookings | $ 146,677 | $ 261,269 | $ 716,176 | $ 1,147,627 |
| Adjusted EBITDA | $ 2,603 | $ 45,018 | $ 46,549 | $ 213,233 |
| Non-GAAP net income | $ (20,834) | $ 6,935 | $ (34,073) | $ 58,178 |
| Non-GAAP earnings per share | $ (0.03) | $ 0.01 | $ (0.04) | $ 0.07 |
NaturalMotion's hit mobile games,
Key Business Terms
-
At closing, NaturalMotion's shareholders and vested option holders will receive an aggregate of
$391 million in cash and approximately 39.8 million shares of Zynga Class A Common Stock - Approximately 11.6 million of the 39.8 million shares will be issued to continuing employees and will be subject to vesting over a three-year period
Strategic Rationale
-
Transaction is expected to be accretive to non-GAAP earnings and generate bookings in the range of
$70 to$80 million and Adjusted EBITDA of$15 to$25 million in 2014 -
Expands
Zynga's creative pipeline into two new consumer categories - Racing and People simulation - Accelerates mobile growth, bringing a track record of success and creative and technical talent
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Provides cutting edge technology and tools, including Euphoria, to fast track
Zynga's ability to deliver hit games
"We believe that bringing
"NaturalMotion set out to make games that wow millions of people, by being obsessed with quality, disrupting and creating genres, and using almost magical technology. When we started talking to Don and his team, it quickly became clear that they shared this vision. Don's background in AAA games and Zynga's expertise in social game play and large-scale game operations will be invaluable to helping us grow our existing CSR and Clumsy Ninja franchises and maximize the breakout potential of our upcoming titles. We've reached our first milestones - creating #1 top-grossing and top-free titles - on our own. We can't wait to see what we can achieve together with
Cost Reduction Plan
Today
Fourth Quarter Business Highlights
-
Average daily bookings per average DAU (ABPU) increased from
$0.051 in the fourth quarter of 2012 to$0.060 in the fourth quarter of 2013, up 19% year-over-year. On a consecutive quarter basis, ABPU was up 10% from$0.055 in the third quarter of 2013. - Monthly Unique Payers (MUPs) in the fourth quarter of 2013 were 1.3 million, compared to 2.9 million in the fourth quarter of 2012. On a consecutive quarter basis, MUPs were down 16% from 1.6 million in the third quarter of 2013.
-
As of
December 31, 2013 ,Zynga had 3 of the top 10 games on Facebook, based on DAUs as reported by the Facebook API, consisting of its most established games, FarmVille 2, Words With Friends and Zynga Poker. - In the fourth quarter of 2013, Words With Friends, achieved record bookings in its five year history.
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Daily active users (DAUs) in the fourth quarter of 2013 were 27 million, compared to 56 million in the fourth quarter of 2012. On a consecutive quarter basis, DAUs were down 12% from 30 million in the third quarter of 2013.
Web DAUs and Mobile DAUs were 14 million and 13 million in the fourth quarter of 2013, respectively. -
Monthly active users (MAUs) in the fourth quarter of 2013 were 112 million, compared to 298 million in the fourth quarter of 2012. On a consecutive quarter basis, MAUs were down 16% from 133 million in the third quarter of 2013.
Web MAUs and Mobile MAUs were 69 million and 43 million in the fourth quarter of 2013, respectively. - Monthly unique users (MUUs) in the fourth quarter of 2013 were 80 million, compared to 167 million in the fourth quarter of 2012. On a consecutive quarter basis, MUUs were down 17% from 97 million in the third quarter of 2013.
-
In the fourth quarter of 2013,
Zynga recorded a restructuring charge of$7 million related to the closure of certain facilities as part of its continued action to reduce its long-term cost structure.
Fourth Quarter 2013 Financial Summary
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Revenue: Revenue was
$176 million for the fourth quarter of 2013, a decrease of 43% compared to the fourth quarter of 2012 and a decrease of 13% compared to the third quarter of 2013. Online game revenue was$152 million , a decrease of 44% compared to the fourth quarter of 2012 and a decrease of 13% compared to the third quarter of 2013. Advertising revenue was$24 million , a decrease of 35% compared to the fourth quarter of 2012 and a decrease of 15% compared to the third quarter of 2013. FarmVille 2,Zynga Poker, and FarmVille accounted for 26%, 21% and 15% of online game revenue, respectively, for the fourth quarter of 2013 compared to 22%, 19% and 18%, respectively, for the third quarter of 2013.
-
Bookings: Bookings were
$147 million for the fourth quarter of 2013, a decrease of 44% compared to the fourth quarter of 2012 and a decrease of 4% compared to the third quarter of 2013. Web bookings were$96 million for the fourth quarter of 2013, compared to$207 million for the fourth quarter of 2012 and$106 million for the third quarter of 2013. Mobile bookings were$51 million for the fourth quarter of 2013, compared to$54 million for the fourth quarter of 2012 and$46 million for the third quarter of 2013.
-
Net loss: Net loss was
$25 million for the fourth quarter of 2013, down from a net loss of$49 million for the fourth quarter of 2012 and up from a net loss of$68 thousand for the third quarter of 2013.
-
Adjusted EBITDA: Adjusted EBITDA was
$3 million for the fourth quarter of 2013 compared to$45 million for the fourth quarter of 2012 and$7 million in the third quarter of 2013.
-
Non-GAAP net income (loss): Non-GAAP net loss was
$21 million for the fourth quarter of 2013, compared to non-GAAP net income of$7 million in the fourth quarter of 2012 and non-GAAP net loss of$16 million in the third quarter of 2013.
-
Net loss per share: Diluted net loss per share was
$0.03 for the fourth quarter of 2013 compared to a net loss per share of$0.06 for the fourth quarter of 2012 and$0.00 for the third quarter of 2013.
-
Non-GAAP EPS: Non-GAAP EPS was (
$0.03 ) for the fourth quarter of 2013 compared to$0.01 for the fourth quarter of 2012 and ($0.02 ) for the third quarter of 2013.
-
Cash and cash flow: As of
December 31, 2013 , cash, cash equivalents and marketable securities were approximately$1.54 billion , compared to$1.52 billion as ofSeptember 30, 2013 . Cash flow from operations was$8 million for the fourth quarter of 2013, compared to$20 million for the fourth quarter of 2012. Free cash flow was$7 million for the fourth quarter of 2013 compared to$30 million for the fourth quarter of 2012.
2013 Annual Financial Summary
-
Revenue: Revenue was
$873 million in 2013, a decrease of 32% on a year-over-year basis. Online game revenue was$759 million , a decrease of 34% on a year-over-year basis. Advertising revenue was$114 million , a decrease of 17% on a year-over-year basis.
-
Bookings: Bookings were
$716 million in 2013, a decrease of 38% on a year-over-year basis.
-
Net loss: Net loss was
$37 million in 2013, which included$84 million of stock-based expense,$45 million of restructuring expense and a$28 million income tax benefit.
-
Adjusted EBITDA: Adjusted EBITDA was
$47 million in 2013, a decrease of 78% year-over-year, primarily due to the decline in bookings.
-
Non-GAAP net loss: Non-GAAP net loss was
$34 million in 2013, a decrease of 159% year-over-year, primarily due to the decline in bookings.
-
Net loss per share: Basic and diluted net loss per share was
$0.05 for the full year 2013, compared to a net loss per share of$0.28 for the full year 2012.
-
Non-GAAP EPS: Non-GAAP EPS was (
$0.04 ) for the full year 2013, compared to$0.07 for the full year 2012.
-
Cash and Cash flow: As of
December 31, 2013 , cash, cash equivalents and marketable securities were approximately$1.54 billion , compared to$1.65 billion as ofDecember 31, 2012 . Cash flow from operations was$29 million for the year endedDecember 31, 2013 , compared to$196 million for the year endedDecember 31, 2012 . Free cash flow was$10 million for the year endedDecember 31, 2013 as compared to($114) million for the year endedDecember 31, 2012 as reported, or$119 million excluding the purchase of the company's headquarters.
Q1 2014 and Full Year Outlook
-
Revenue is projected to be in the range of
$155 million to$165 million -
Net loss is projected to be in the range of
$56 million to$49 million , including a restructuring charge of approximately$15 million to$17 million -
Diluted net loss per share is projected to be in the range of
$0.07 to$0.06 , based on a share count of approximately 860 million shares -
Bookings are projected to be in the range of
$138 million to$148 million -
Adjusted EBITDA is projected to be in the range of
$5 million to$10 million -
Non-GAAP loss per share is projected to
$0.01 , based on a share count of approximately 860 million shares
-
Bookings are projected to be in the range of
$760 million to$810 million -
Adjusted EBITDA is projected to be in the range of
$65 million to$100 million -
Non-GAAP EPS is projected to be in the range of
$0.01 to$0.03 , based on a share count of approximately 985 million shares
Conference Call Details
About
The
Forward-Looking Statements
This press release contains forward-looking statements relating to, among other things, our outlook for first quarter and full year 2014 revenue, net loss, EPS, weighted average diluted share count, bookings, Adjusted EBITDA, non-GAAP net loss, non-GAAP EPS, non-GAAP weighted average diluted share count, our future operational and strategic plans; the financial and operational impact of our expected acquisition of NaturalMotion, including but not limited to the expected impact on our earnings, bookings and Adjusted EBITDA results in 2014 and our expected ability to expand our creative pipeline, accelerate our mobile growth and fast track our ability to deliver more hit games; the results and structure of our announced cost reduction plan; our ability to strengthen the core of our business and achieve future growth and profits; our ability to successfully transition our business to take
advantage of the market opportunity in our industry; our ability to launch successful new games and hit games for web and mobile generally and deliver compelling entertainment experiences. 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, our relationship with Facebook or changes in the Facebook platform, delays or other
challenges in the completion of the NaturalMotion acquisition, its integration and the success of its current and future games as part of
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, free cash flow, non-GAAP net income and 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 first 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), non-GAAP effective tax rate outlook to GAAP effective tax rate 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. For the same reason, we have also not provided a reconciliation of our outlook for the impact on bookings, Adjust EBITDA and non-GAAP EPS related to the NaturalMotion acquisition.
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 contingent consideration 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, interest income, and the net gain from the termination of our lease and purchase of our corporate headquarters building;
- 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 net income (loss) does not include the net gain from the termination of our lease and purchase of the Company's corporate headquarters building;
- 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;
- Free cash flow is derived from net cash provided by operating activities less cash spent on capital expenditures, including the purchase of our corporate headquarters building, 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.
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| CONSOLIDATED BALANCE SHEETS | ||
| (In thousands, unaudited) | ||
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| 2013 | 2012 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 465,523 | $ 385,949 |
| Marketable securities | 659,973 | 898,821 |
| Accounts Receivable | 65,667 | 106,327 |
| Income tax receivable | 6,943 | 5,607 |
| Deferred tax assets | 16,293 | 30,122 |
| Restricted cash | 3,493 | 28,152 |
| Other current assets | 23,507 | 29,392 |
| Total current assets | 1,241,399 | 1,484,370 |
| Long-term marketable securities | 416,474 | 367,543 |
| Goodwill | 227,989 | 208,955 |
| Other intangible assets, net | 18,282 | 33,663 |
| Property and equipment, net | 348,793 | 466,074 |
| Other long-term assets | 26,148 | 15,715 |
| Total assets | $ 2,279,085 | $ 2,576,320 |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Accounts payable |
|
|
| Other current liabilities | 68,866 | 146,883 |
| Deferred revenue | 186,663 | 338,964 |
| Total current liabilities | 276,502 | 509,145 |
| Long-term debt | -- | 100,000 |
| Deferred revenue | 3,252 | 8,041 |
| Deferred tax liabilities | -- | 24,584 |
| Other non-current liabilities | 122,060 | 109,047 |
| Total liabilities | 401,814 | 750,817 |
| Stockholders' equity: | ||
| Common stock and additional paid in capital | 2,823,743 | 2,725,605 |
| Treasury stock | -- | (295,113) |
| Accumulated other comprehensive income (loss) | (1,046) | (1,447) |
| Accumulated deficit | (945,426) | (603,542) |
| Total stockholders' equity | 1,877,271 | 1,825,503 |
| Total liabilities and stockholders' equity | $ 2,279,085 | $ 2,576,320 |
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| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (In thousands, except per share data, unaudited) | ||||
| Three Months Ended | Twelve Months Ended | |||
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| 2013 | 2012 | 2013 | 2012 | |
| Revenue: | ||||
| Online game | $ 152,310 | $ 274,337 | $ 759,572 | $ 1,144,252 |
| Advertising | 24,052 | 36,828 | 113,694 | 137,015 |
| Total Revenue | 176,362 | 311,165 | 873,266 | 1,281,267 |
| Costs and expenses: | ||||
| Cost of revenue | 58,876 | 77,056 | 248,358 | 352,169 |
| Research and development | 78,475 | 131,847 | 413,001 | 645,648 |
| Sales and marketing | 24,763 | 32,446 | 104,403 | 181,924 |
| General and administrative | 41,725 | 32,206 | 162,918 | 189,004 |
| Impairment of intangible assets | -- | -- | 10,217 | 95,493 |
| Total costs and expenses | 203,839 | 273,555 | 938,897 | 1,464,238 |
| Income (loss) from operations | (27,477) | 37,610 | (65,631) | (182,971) |
| Interest income | 915 | 1,230 | 4,148 | 4,749 |
| Other income (expense), net | 1,079 | (1,111) | (3,386) | 18,647 |
| Income (loss) before income taxes | (25,483) | 37,729 | (64,869) | (159,575) |
| Provision for income taxes | (241) | 86,290 | (27,887) | 49,873 |
| Net income (loss) | $ (25,242) | $ (48,561) | $ (36,982) | $ (209,448) |
| Net income (loss) per share: | ||||
| Basic and diluted | $ (0.03) | $ (0.06) | $ (0.05) | $ (0.28) |
| Weighted average common shares used to compute net income (loss) per share: | ||||
| Basic and diluted | 820,435 | 771,533 | 799,794 | 741,177 |
| Stock-based expense included in the above line items: | ||||
| Cost of revenue | $ 819 | $ 1,018 | $ 468 | $ 12,116 |
| Research and development | 15,024 | 15,395 | 61,931 | 200,640 |
| Sales and marketing | (248) | 3,528 | 8,079 | 24,684 |
| General and administrative | 3,732 | (5,079) | 13,915 | 44,546 |
| Total stock-based expense | $ 19,327 | $ 14,862 | $ 84,393 | $ 281,986 |
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| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
| (In thousands, unaudited) | ||||
| Three Months Ended | Twelve Months Ended | |||
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| 2013 | 2012 | 2013 | 2012 | |
| Operating activities | ||||
| Net income (loss) | $ (25,242) | $ (48,561) | $ (36,982) | $ (209,448) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Depreciation and amortization | 32,142 | 33,430 | 129,047 | 141,479 |
| Stock-based expense | 19,327 | 14,862 | 84,393 | 281,986 |
| Accretion and amortization on marketable securities | 3,265 | 5,165 | 17,575 | 17,223 |
| Net gain on termination of lease and purchase of building | -- | -- | -- | (19,886) |
| (Gain) loss from sales of investments, assets and other, net | 710 | 724 | 8,147 | 563 |
| Tax benefits from stock-based awards | (452) | 15,972 | (11,244) | 21,652 |
| Excess tax benefits from stock-based awards | 452 | (15,972) | 11,244 | (21,652) |
| Deferred income taxes | (513) | 14,550 | (18,766) | (43,841) |
| Impairment of intangible assets | -- | -- | 10,217 | 95,493 |
| Changes in operating assets and liabilities: | ||||
| Accounts receivable, net | 904 | (726) | 40,806 | 34,338 |
| Income tax receivable | (867) | 1,157 | (1,336) | 12,976 |
| Other assets | 3,738 | 10,988 | 3,932 | 19,908 |
| Accounts payable | 403 | (14,272) | (2,325) | (21,312) |
| Deferred revenue | (29,685) | (49,896) | (157,090) | (133,640) |
| Other liabilities | 3,550 | 52,358 | (48,944) | 19,928 |
| Net cash provided by operating activities | 7,732 | 19,779 | 28,674 | 195,767 |
| Investing activities | ||||
| Purchase of corporate headquarters building | -- | -- | -- | (233,700) |
| Purchases of marketable securities | (252,977) | (298,815) | (1,074,919) | (1,826,137) |
| Sales of marketable securities | 118,702 | 73,711 | 353,603 | 223,828 |
| Maturities of marketable securities | 191,820 | 206,218 | 891,238 | 647,916 |
| Acquisition of property and equipment | (469) | (6,250) | (7,813) | (98,054) |
| Proceeds from sale of property and equipment | 3,057 | -- | 3,057 | -- |
| Business acquisitions, net of cash acquired | -- | -- | (18,054) | (205,510) |
| Restricted cash | -- | 443 | 227 | 6,979 |
| Equity method investment | -- | (10,000) | -- | (10,000) |
| Other investing activities, net | (91) | -- | 137 | (2,256) |
| Net cash (used in) provided by investing activities | 60,042 | -34,693 | 147,476 | (1,496,934) |
| Financing activities | ||||
| Repurchase of common stock | -- | (11,756) | (9,302) | (11,756) |
| Proceeds from debt, net of issuance costs | -- | -- | -- | 99,780 |
| Taxes paid related to net share settlement of equity awards | (356) | (238) | (1,387) | (26,307) |
| Proceeds from exercise of stock options and warrants | 11,793 | 2,670 | 18,223 | 16,960 |
| Proceeds from employee stock purchase plan | -- | -- | 7,892 | 4,489 |
| Excess tax benefits from stock-based awards | (452) | 15,972 | (11,244) | 21,652 |
| Repayment of debt | -- | -- | (100,000) | -- |
| Net cash provided by financing activities | 10,985 | 6,648 | (95,818) | 104,818 |
| Effect of exchange rate changes on cash and cash equivalents | 47 | (144) | (757) | (45) |
| Net increase in cash and cash equivalents | 78,806 | (8,410) | 79,575 | (1,196,394) |
| Cash and cash equivalents, beginning of period | 386,718 | 394,359 | 385,949 | 1,582,343 |
| Cash and cash equivalents, end of period |
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| RECONCILIATION OF GAAP TO NON-GAAP RESULTS | ||||
| (In thousands, except per share data, unaudited) | ||||
| Three months ended | Twelve months ended | |||
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| 2013 | 2012 | 2013 | 2012 | |
| Reconciliation of Revenue to Bookings | ||||
| Revenue | $ 176,362 | $ 311,165 | $ 873,266 | $ 1,281,267 |
| Change in deferred revenue | (29,685) | (49,896) | (157,090) | (133,640) |
| Bookings | $ 146,677 | $ 261,269 | $ 716,176 | $ 1,147,627 |
| Reconciliation of Net income (loss) to Adjusted EBITDA | ||||
| Net income (loss) | $ (25,242) | $ (48,561) | $ (36,982) | $ (209,448) |
| Provision for (benefit from) income taxes | (241) | 86,290 | (27,887) | 49,873 |
| Other income (expense), net | (1,079) | 1,111 | 3,386 | (18,647) |
| Interest income | (915) | (1,230) | (4,148) | (4,749) |
| Restructuring expense | 7,366 | 7,862 | 44,683 | 7,862 |
| Legal settlement | -- | 1,150 | -- | 3,024 |
| Depreciation and amortization | 32,142 | 33,430 | 129,047 | 141,479 |
| Impairment of intangible assets | -- | -- | 10,217 | 95,493 |
| Acquisition-related contingent consideration | 930 | -- | 930 | -- |
| Stock-based compensation | 19,327 | 14,862 | 84,393 | 281,986 |
| Change in deferred revenue | (29,685) | (49,896) | (157,090) | (133,640) |
| Adjusted EBITDA | $ 2,603 | $ 45,018 | $ 46,549 | $ 213,233 |
| Reconciliation of Net income to Non-GAAP net income | ||||
| Net income (loss) | $ (25,242) | $ (48,561) | $ (36,982) | $ (209,448) |
| Impairment of intangible assets | -- | -- | 10,217 | 95,493 |
| Acquisition-related contingent consideration | 930 | -- | 930 | -- |
| Stock-based compensation | 19,327 | 14,862 | 84,393 | 281,986 |
| Amortization of intangible assets from acquisitions | 726 | 4,845 | 10,341 | 39,843 |
| Change in deferred revenue | (29,685) | (49,896) | (157,090) | (133,640) |
| Restructuring expense | 7,366 | 7,862 | 44,683 | 7,862 |
| Legal settlements | -- | 1,150 | -- | 3,024 |
| Gain on purchase of corporate headquarters building | -- | -- | -- | (19,886) |
| Tax effect of non-GAAP adjustments to net income | 5,744 | 76,673 | 9,435 | (7,056) |
| Non-GAAP net income | $ (20,834) | $ 6,935 | $ (34,073) | $ 58,178 |
| Reconciliation of GAAP diluted shares to Non-GAAP diluted shares | ||||
| GAAP diluted shares | 820,435 | 771,533 | 799,794 | 741,177 |
| Other dilutive equity awards (1) | -- | 49,964 | -- | 88,155 |
| Non-GAAP diluted shares | 820,435 | 821,497 | 799,794 | 829,332 |
| Non-GAAP net income per share: | $ (0.03) | $ 0.01 | $ (0.04) | $ 0.07 |
| Reconciliation of Cash provided by operating activities to Free cash flow | ||||
| Net cash provided by operating activities | 7,732 | 19,779 | 28,674 | 195,767 |
| Acquisition of property and equipment | (469) | (6,250) | (7,813) | (98,054) |
| Purchase of building | -- | -- | -- | (233,700) |
| Excess tax benefits from stock-based awards | (452) | 15,972 | (11,244) | 21,652 |
| Free cash flow | $ 6,811 | $ 29,501 | $ 9,617 | $ (114,335) |
| Reconciliation of GAAP to Non-GAAP provision for (benefit from) income taxes | ||||
| GAAP provision for (benefit from) income taxes | (241) | 86,290 | (27,887) | 49,873 |
| Net gain on termination of lease and purchase of building | -- | -- | -- | (10,679) |
| Stock-based expense | (798) | 22,274 | 2,768 | 104,196 |
| Amortization of intangible assets from acquisitions | 5 | 4,955 | 539 | 18,938 |
| Acquisition-related contingent consideration | 345 | -- | 345 | -- |
| Impairment of intangible assets | -- | -- | 2,043 | 37,867 |
| Change in deferred revenue | (5,318) | (51,042) | (17,634) | (90,901) |
| Restructuring expense | 22 | 972 | 2,504 | 972 |
| Legal settlements | -- | 1,176 | -- | 1,671 |
| Other | -- | (55,008) | -- | (55,008) |
| Non-GAAP provision for (benefit from) income taxes | $ (5,985) | $ 9,617 | $ (37,322) | $ 56,929 |
| (1) Gives effect to all dilutive awards based on the treasury stock method. | ||||
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| RECONCILIATION OF GAAP TO NON-GAAP FIRST QUARTER 2014 OUTLOOK | |
| (In thousands, except per share data, unaudited) | |
| First Quarter 2014 | |
| Reconciliation of Revenue to Bookings | |
| Revenue range | $ 155,000 - 165,000 |
| Change in deferred revenue | (17,000) |
| Bookings range | $ 138,000 - 148,000 |
| Reconciliation of Net loss to Adjusted EBITDA | |
| Net loss range |
|
| Income tax expense | 1,000 |
| Other income, net | (1,000) |
| Interest income | (1,000) |
| Restructuring expense | 17,000 - 15,000 |
| Depreciation and amortization | 30,000 |
| Stock-based expense | 25,000 |
| Acquisition-related transaction expenses | 7,000 |
| Change in deferred revenue | (17,000) |
| Adjusted EBITDA range |
|
| Reconciliation of Net loss to Non-GAAP Net Loss | |
| Net loss range |
|
| Stock-based expense | 25,000 |
| Amortization of intangible assets from acquisitions | 8,000 |
| Restructuring expense | 17,000 - 15,000 |
| Acquisition-related transaction expenses | 7,000 |
| Change in deferred revenue | (17,000) |
| Tax effect of non-GAAP adjustments to net loss | 6,000 - 5,000 |
| Non-GAAP net income (loss) range |
|
| GAAP and Non-GAAP diluted shares | 860,000 |
| Net income (loss) per share range |
|
| Non-GAAP net income (loss) per share |
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CONTACT: Investors -Darren Yip 415-339-5266 investors@zynga.com Press -Stephanie Hess 415-503-0303 press@zynga.com
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