A bump in the road for Zynga:
Zynga’s Revenue Growth Rate Is Slowing
Deal Journal
Wall Street Journal
September 21, 2011, 5:42 PM ET
Zynga is just out with its yet-again- amended IPO filing, and it shows some slowing — albeit still impressive — revenue growth, and its first-ever dip in the company’s preferred measure of sales.
Zynga also disclosed it conducted a “third-party” valuation in August that assumed a $14.05 billion value for Zynga’s stock — up slightly from the $13.98 billion valuation three months earlier. The analysis also baked in 75% odds of an IPO — slightly lower than the 80% probability of an IPO three months earlier before a stretch of wild market swings that dented the IPO market.
In0 its IPO filing, Zynga said its 4% dip in second-quarter “bookings” — the company’s preferred 0measure of revenue — was “primarily attributable to a decrease in [average daily active users].”
Zynga had 59 million average daily active users for the second quarter, down from 62 million in the first quarter but up from 48 million in the fourth quarter of 2010. This number tends to bounce around a lot, tied to the launches of new Zynga games, and the company said it didn’t launch any new big games in the first half of the year.
According to the IPO filing, Zynga’s revenue was $279.1 million in the three months ended June 30. That’s a 115% jump from the summer quarter in 2010. Not too shabby, at all, except the company’s revenue growth rate in the prior two quarters was 141% and 251%.
The company’s adjusted Ebitda also dipped about 31% in the three months ended June 30 from the same quarter in 2010. Total costs and expenses in the second quarter nearly equaled Zynga’s revenue, the company disclosed.
Research-and-development expenses in the first half of the year nearly tripled from the same period in 2010. Nearly all of the R&D expense jump was for “headcount-related expenses,” Zynga said, as headcount grew to 2,451 at June 30 compared to 1,483 at the end of 2010.
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