ZNGA
$2.88
Zynga Inc Cl A Cmn
$.05
1.77%
Earnings Details
4th Quarter December 2016
Thursday, February 09, 2017 4:04:15 PM
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Summary

Zynga Inc Cl A Cmn Misses

Zynga Inc Cl A Cmn (ZNGA) reported breakeven results for the 4th Quarter December 2016 on revenue of $190.5 million. The consensus earnings estimate was $0.01 per share on revenue of $193.6 million. The Earnings Whisper number was $0.02 per share. Revenue grew 2.6% on a year-over-year basis.

The company said it expects a first quarter loss of approximately $0.02 per share on revenue of approximately $185.0 million. The current consensus estimate is for earnings of $0.02 per share on revenue of $200.4 million for the quarter ending March 31, 2017.

Zynga Inc provides social game services. The Company develops, markets and operates social games as live services played on mobile platforms such as iOS and Android and social networking sites such as Facebook.

Results
Reported Earnings
$0.00
Earnings Whisper
$0.02
Consensus Estimate
$0.01
Reported Revenue
$190.5 Mil
Revenue Estimate
$193.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Zynga Announces Fourth Quarter 2016 and 2016 Financial Results

Delivered Results Above Guidance Range With $190.5M in Revenue and $201.5M in Bookings

Generated Operating Cash Flow of $60M in 2016

Zynga Inc. (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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Fourth Quarter 2016 Financial Highlights</span>

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

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">2016 Annual Financial Highlights</span>

-- 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

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Mobile Highlights</span>

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

Three Months Ended
Twelve Months Ended
(in thousands, except per share data)
December 31,
September 30,
December 31,
December 31,
December 31,
2016
2016
2015
2016
2015
GAAP Results
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
)
Non-GAAP Results
Bookings
$
201,532
$
196,723
$
182,104
$
754,533
$
699,955
Adjusted EBITDA
$
10,584
$
3,580
$
5,321
$
48,846
$
81,889

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Player Metrics</span> (users and payers in millions)

Three Months Ended
December 31,
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 )%
Average daily bookings per average DAU (ABPU)
$
0.120
$
0.116
$
0.110
3
%
9
%
Average monthly unique users (MUUs)
56
57
48
(1 )%
16
%
Average monthly unique payers (MUPs)
1.2
1.3
0.8
(6 )%
50
%
Payer conversion
2.2
%
2.3
%
1.7
%
(5 )%
29
%

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Fourth Quarter 2016 Financial Summary</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">2016 Annual Financial Summary</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">First Quarter Outlook</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Conference Call Details</span>

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

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">About Zynga Inc.</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Key Operating and Financial Metrics</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Forward Looking Statements</span>

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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Non-GAAP Financial Measures</span>

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,
September 30,
December 31,
December 31,
December 31,
2016
2016
2015
2016
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,
September 30,
December 31,
December 31,
December 31,
2016
2016
2015
2016
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,
September 30,
December 31,
December 31,
December 31,
2016
2016
2015
2016
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
)

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">CONTACTS</span>

Rebecca Lau

investorrelations@zynga.com

Stephanie Hess

Vice President of Communications

shess@zynga.com

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