Zynga Enters Into Agreement to Acquire Small Giant Games, Creator of Hit Mobile Game Franchise Empires & Puzzles
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Adds a
Proven Studio , Another Forever Franchise and Expands New Game Pipeline -
Acquisition Expected to Close Effective as of
January 1, 2019 - Zynga Raises Q4 2018 Financial Guidance Driven by Strength of its Existing Live Services
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Management will Host a Live Q&A Session Today at
2:00 p.m. Pacific Time
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20181220005883/en/

Zynga Acquires Small Giant Games (Graphic: Business Wire)
Founded in 2013, Small Giant is a mobile gaming studio based in
“We’ve been impressed by the quality and momentum of Empires &
Puzzles as we add another Forever Franchise into Zynga’s portfolio,”
said
“Our studio was founded on the idea that small, skillful teams can
accomplish giant things, and I am confident that partnering with
Q4 2018 Guidance Update
As a reminder, this performance does not include any contributions from
Small Giant as the transaction is expected to close effective as of
Updated Q4 2018 guidance is as follows:
Original | Raised | |||||||||||||||||
Q4'18 | Zynga | Q4'18 | ||||||||||||||||
(in thousands, except per share data) | Guidance | Update | Guidance | |||||||||||||||
GAAP | ||||||||||||||||||
Revenue | $ | 235,000 | $ | 8,000 | $ | 243,000 | ||||||||||||
(B) |
Net increase in deferred revenue(1) | $ | (15,000 | ) | $ | (2,000 | ) | $ | (17,000 | ) | ||||||||
Net (loss) income | $ | (2,000 | ) | 500 | $ | (1,500 | ) | |||||||||||
Basic share count | 867,000 | - | 867,000 | |||||||||||||||
Diluted net (loss) income per share | $ | (0.00 | ) | - | $ | (0.00 | ) | |||||||||||
Non-GAAP | ||||||||||||||||||
Bookings | $ | 250,000 | $ | 10,000 | $ | 260,000 | ||||||||||||
(A) |
Adjusted EBITDA | $ | 32,000 | $ | 1,000 | $ | 33,000 | |||||||||||
Management Reporting = (A) - (B) |
Footnote: |
|
(1) For clarity, a net release of deferred revenue results in revenue being higher than bookings and is a positive impact to Adjusted EBITDA as reported; a net increase in deferred revenue results in revenue being lower than bookings and is a negative impact to Adjusted EBITDA as reported. | |
Live Q&A Session
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: 2365758
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 mobile and web, including FarmVille, Zynga Poker, Words
With Friends, Hit it Rich! Slots and
About Small Giant Games
Founded in 2013, and headquartered in
Forward-Looking Statements
This letter contains forward-looking statements, including those statements relating to our updated outlook for the fourth quarter under the headings "Q4 2018 Guidance Update" and “Reconciliation of GAAP to Non-GAAP Raised Fourth Quarter 2018 Guidance” and statements relating to, among other things: the strength of our live service portfolio, the closing date of the acquisition of Small Giant, our overall growth, and expanding the reach of Small Giant’s games.
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. Particular
uncertainties that could materially affect future results include risks
associated with our acquisition of Small Giant, including (i) our
ability to achieve the anticipated benefits of the transaction; (ii) our
ability to successfully integrate Small Giant’s operations and
employees; (iii) potential difficulties in employee retention; (iv)
unexpected costs, charges or expenses; (v) our management of the credit
facility established in connection with the transaction; and (vi) risks
associated with international operations. 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
In addition, the preliminary financial results set forth in this letter
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 quarter and year ended
Non-GAAP Financial Measures
We have provided in this letter certain non-GAAP financial measures to supplement our consolidated financial statements prepared in accordance with U.S. 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, or superior to, 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 measures 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 letter to the most directly comparable GAAP financial measures in the following tables. Because of the following limitations of our non-GAAP financial measures, you should consider the non-GAAP financial measures presented in this letter with our GAAP financial statements.
Key limitations of our non-GAAP financial measures include:
- Bookings does not reflect that we defer and recognize online game revenue and revenue from certain advertising transactions over the estimated average playing period of payers for durable virtual items or as consumed for consumable virtual items;
- Adjusted EBITDA does not include the impact of stock-based expense, acquisition-related transaction expenses, and contingent consideration fair value adjustments;
- Adjusted EBITDA does not reflect provisions for or benefits from income taxes and does not include other income (expense) net, which includes foreign exchange gains and losses, and interest income; and
- Adjusted EBITDA excludes depreciation and amortization of tangible and intangible assets. Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future.
ZYNGA INC. |
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RECONCILIATION OF GAAP TO NON-GAAP RAISED FOURTH QUARTER 2018 GUIDANCE |
||||||
(In thousands, except per share data, unaudited) | ||||||
Fourth Quarter 2018 | ||||||
Reconciliation of Revenue to Bookings | ||||||
Revenue | $ | 243,000 | ||||
Change in deferred revenue | 17,000 | |||||
Bookings | $ | 260,000 | ||||
Reconciliation of Net Loss to Adjusted EBITDA | ||||||
Net loss | $ |
(1,500) |
||||
Provision for income taxes | 5,000 | |||||
Other income, net |
(3,000) |
|||||
Interest income |
(1,500) |
|||||
Depreciation and amortization | 12,000 | |||||
Acquisition-related transaction expenses | 1,000 | |||||
Contingent consideration fair value adjustment | 2,000 | |||||
Stock-based compensation expense | 19,000 | |||||
Adjusted EBITDA | $ | 33,000 | ||||
GAAP basic shares | 867,000 | |||||
Basic net loss per share | $ |
(0.00) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20181220005883/en/
Source:
Investor Relations:
Rebecca Lau
Investors@zynga.com
Press:
Carmen Pearson Argueta
Press@zynga.com