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  • Lets Play!-by zynga

Let's Play!-by zynga

 

Zynga is a leading developer of the world's most popular social games. Headquartered in San Francisco, our mission is to connect the world through games, and since 2007, more than one billion people have played one of our beloved franchises like FarmVille, Zynga Poker and Words With Friends. In 2014, we acquired NaturalMotion, an Oxford-based mobile game and technology developer and the creator of hits like CSR Racing and Clumsy Ninja. Zynga is named after founder Mark Pincus late bulldog Zinga, and the legacy of her playful and loyal nature continues to inspire our company culture.

 

Connecting the World Through Games

Zynga today represents a unique combination of assets, talent and opportunity. No other company offers consumers our breadth of game offerings and dedication to combining consumer accessibility with fun and social.

 

Mark Pincus, Founder

 

over 130 million hands of poker are played each day in Zynga Poker

 

February 9, 2017

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

SAN FRANCISCO, Feb. 09, 2017 (GLOBE NEWSWIRE) -- Zynga Inc. (NASDAQ: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. Zyngamanagement 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.

Fourth Quarter 2016 Financial Highlights

·         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

2016 Annual Financial Highlights

·         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

Mobile Highlights

·         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, 
  2016



September 30, 
  2016



December 31, 
  2015



December 31, 
  2016



December 31, 
  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(1)


$

10,584



$

3,580



$

5,321



$

48,846



$

81,889























(1)  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.

Player Metrics (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)(1)



56




57




48




(1

)%



16

%

Average   monthly unique payers (MUPs)(1)



1.2




1.3




0.8




(6

)%



50

%

Payer   conversion(1)



2.2

%



2.3

%



1.7

%



(5

)%



29

%






















(1)  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 RacingCSR Classics and Clumsy Ninja are excluded from MUUs, MUPs and payer conversion.

Fourth Quarter 2016 Financial Summary

·         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 PokerHit 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 whileZynga 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.

2016 Annual Financial Summary

·         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 2Black 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 millionfor 2016, compared to ($44) million for 2015. Free cash flow was $50 million for 2016 compared to ($51) million for 2015.

First Quarter Outlook

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.

Conference Call Details

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

About Zynga Inc.

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'sgames across web and mobile, including FarmVilleZynga PokerWords With FriendsHit 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.

Key Operating and Financial Metrics

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.

Forward Looking Statements

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.

Non-GAAP Financial Measures

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


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











·         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   STATEMENTS OF OPERATIONS


(In   thousands, except per share data, unaudited)











Three   Months Ended



Twelve   Months Ended




December 31,
  2016



September 30,
  2016



December 31,
  2015



December 31,
  2016



December 31,
  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,
  2016



September 30,
  2016



December 31,
  2015



December 31,
  2016



December 31,
  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,
  2016



September 30,
  2016



December 31,
  2015



December 31,
  2016



December 31,
  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

)