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Zynga IPO headed for NASDAQ

Mon 17 Oct 2011 7:31am GMT / 3:31am EDT / 12:31am PDT
Business

SEC filing shows that 78 per cent of 2010 revenues came from top three games

Zynga will list its forthcoming IPO on the NASDAQ stock exchange under the ticker symbol "ZNGA", according to a new SEC filing.

The NASDAQ is home to a significant number of tech companies, and the new filing suggests that Zynga is now ready for its IPO after numerous delays over uncertain market conditions.

The document also revealed that 78 per cent of the company's revenue was generated by its top three games: CityVille, Mafia Wars and FarmVille.

Despite the rapid rise of EA's The Sims Social, Zynga remains the clear leader in the social market. However, the company launched an IP offensive at an official event last week, announcing five new games and a proprietary portal, Zynga Direct.

Zynga first filed for its IPO in July. The company is expected to raise around $20 billion, with CEO Mark Pincus due to retain an "unprecedented" 70 times more voting power than anyone buying shares in the floatation.

5 Comments

Shane Sweeney
Academic

364 291 0.8
From only three games? Did we not only just read about Rovio potentially wanting to go public at some point and they only have one profoundly profitable game.

Posted:2 years ago

#1

Kyle Davidson

12 0 0.0
They may only have three games, but the sheer number of users they have speaks for itself.

Posted:2 years ago

#2
The numbers do not necessarily translate all into profits (even at 1% conversion). The repeat business is also limited. not all MAUs are converted. And, its unlikely for Zynga to enjoy the same success as the peak of Farmville, just because lifes like that :)

unless FB games improve a whole lot more, with traditional elements of gameplay or strategy, the newcomers or existing biz models reliant on the FB trend might find themselves in boggy mucky quicksand

Note: recent accounting changes of how Zynga reports its PNL which converted a loss into a profit (of virtual goods) at the US SEC, and this should be taken into account of Zngas true profitability.

[link url=http://sec.gov/Archives/edgar/data/1439404/000119312511270669/d198836ds1a.htm
]http://sec.gov/Archives/edgar/data/14394...[/link]

Edited 1 times. Last edit by Dr. Chee Ming Wong on 17th October 2011 1:52pm

Posted:2 years ago

#3

Michael Bennett
Senior Designer

39 12 0.3
MAU is a poor indication of social game performance. Much more revealing is their DAU. Take into account that they're pulling in 850 million in revenue per year, divide by 365 and then divide by their average DAU over the course of that year and you get an average revenue per user per day of around 4.5 cents. Also think of it this way; Zynga have around 2000 employees and 850 million in revenue ($425000 per employee per year). Assuming very generously that they pay their average employee 100k USD, they've a lot of room to move with their various overheads and advertising spend. I think they've probably spent as much as they possibly can on acquiring new customers at negative ROI because they're more worried about making sure the competition can't get a foothold than about making a short term profit. So, in the event their games did stop making quite as much money, they're not particularly vulnerable; they could reduce ad spend and only spend on new customers acquired at a positive ROI (which they will start doing eventually anyway). Most importantly, they seem to be really investing in improving their new releases. If they keep that up they should be more than fine.

Edited 1 times. Last edit by Michael Bennett on 17th October 2011 8:59pm

Posted:2 years ago

#4
Michael's calculations are subject to a number of factors i.e. Facebook not changing it's pricing model, Facebook not closing the door on Zynga, consumers not lossing interest in Zynga product etc. It's all written down in the SEC prospectus under "risks": and rightly so !

Posted:2 years ago

#5

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