After the beating Zynga took in 2012, nobody was really looking forward to its year end results. It was assumed that everything would be doom and gloom for the troubled social game developer. The good news is that revenue and DAUs/MAUs are up. Everything else is just kind of middling.
Starting off with revenue, Zynga reported that full year 2012 revenue of $1.28 billion, which is an increase of 12 percent year-over-year. Quarter four revenue was at $311 million, which is pretty much flat year-over-year. Bookings in both full year and quarter four were down 1 percent and 15 percent respectively.
“The biggest highlight of the quarter was seeing our team deliver a successful sequel in FarmVille2, a next generation social game that offers cutting edge 3-D experiences loved by millions of FarmVille fans,” said Mark Pincus, CEO and Founder, Zynga. “In 2013 we’re excited to bring this new class of social games to mobile phones and tablets and build a network that offers an easier, better way for people to play together.”
On a year-over-year basis, DAUs and MAUs were up for Zynga. DAUs increased from 54 million in Q4 2011 to 56 million in Q4 2012. MAUs increased from 240 million in Q4 2011 to 298 million in Q4 2012. On a consecutive quarter basis, however, DAUs and MAUs were down 6 percent and 4 percent respectively.
Even if its quarterly users were down, Zynga still had some of the top performing games on Web-based platforms. It also had five of top the 10 games on Facebook in December of last year. That’s just one month, however, and data from App Center showed Zynga had none of its games in the top five Facebook games of 2012.
“Our team executed well in the fourth quarter and made important progress in building sustainable new revenue streams and further aligning our company around our best growth opportunities,” said David Ko, Chief Operations Officer, Zynga. “2013 will be a pivotal transition year and we are focused on achieving three strategic objectives: growing our franchises on mobile and web, expanding our network and maintaining profitability on an adjusted EBITDA basis. With 298 million monthly average users, including 72 million on mobile alone, Zynga already has the largest social gaming audience and remains the best positioned company to lead in building the future of social gaming.”
Here’s a breakdown of the annual and fourth quarter results:
2012 Annual Financial Summary
Revenue: Revenue was $1.28 billion in 2012, an increase of 12% on a year-over-year basis. Online game revenue was $1.14 billion, an increase of 7% on a year-over-year basis. Advertising revenue was $137 million, an increase of 84% on a year- over-year basis.
Bookings: Bookings were $1.15 billion in 2012, a decrease of 1% on a year-over-year basis.
Net loss: GAAP net loss was $209.4 million in 2012, which included $282.0 million of stock-based expense and $49.9 million of income tax expense driven by a $53.8 million charge related to accelerating the implementation of Zynga’s international structure.
Adjusted EBITDA: Adjusted EBITDA was $213.2 million in 2012, a decrease of 30% year-over-year, primarily due to increased cash investment in research and development, datacenters and infrastructure.
Non-GAAP net income: Non-GAAP net income was $58.2 million in 2012, a decrease of 68% year-over-year, primarily due to increased investment in research and development.
EPS: Diluted EPS was ($0.28) for the full year 2012, compared to ($1.40) for the full year 2011.
Non-GAAP EPS: Non-GAAP EPSwas $0.07 for the full year 2012, compared to $0.24 for the full year 2011.
Cash and Cash flow: As of December 31, 2012, cash, cash equivalents and marketable securities were approximately $1.65 billion, compared to $1.92 billion as of December 31, 2011. Cash flow from operations was $195.8 million for the year ended December 31, 2012, compared to $389.2 million for the year ended December 31, 2011. Free cash flow was ($114.3) million for the year ended December 31, 2012 as reported, or $119.4 million excluding the purchase of the company’s headquarters, compared to $137.3 million for the year ended December 31, 2011.
Fourth Quarter 2012 Financial Summary
Revenue: Revenue was $311.2 million for the fourth quarter of 2012, flat compared to the fourth quarter of 2011 and a decrease of 2% compared to the third quarter of 2012. Online game revenue was $274.3 million, a decrease of 3% compared to the fourth quarter of 2011 and a decrease of 4% compared to the third quarter of 2012. Advertising revenue was $36.8 million, an increase of 35% compared to the fourth quarter of 2011 and an increase of 19% compared to the third quarter of 2012.
Bookings: Bookings were $261.3 million for the fourth quarter of 2012, a decrease of 15% compared to the fourth quarter of 2011 and an increase of 2% compared to the third quarter of 2012.
Net loss: Net loss was $48.6 million for the fourth quarter of 2012 compared to a net loss of $435.0 million for the fourth quarter of 2011. Net loss for the fourth quarter of 2012 included $86.3 million of income tax expense driven by a $53.8 million charge related to accelerating the implementation of Zynga’s international structure and $14.9 million of stock- based expense compared to $530.0 million of stock-based expense included in the fourth quarter of 2011.
Adjusted EBITDA: Adjusted EBITDA was $45.0 million for the fourth quarter of 2012 compared to $67.8 million for the fourth quarter of 2011 and $16.2 million in the third quarter of 2012.
Non-GAAP net income: Non-GAAP net income was $6.9 million for the fourth quarter of 2012, down from non-GAAP net income of $37.2 million in the fourth quarter of 2011 and up from a non-GAAP net loss of $0.4 million in the third quarter of 2012.
EPS: Diluted EPS was ($0.06) for the fourth quarter of 2012 compared to ($1.22) for the fourth quarter of 2011 and ($0.07) for the third quarter of 2012.
Non-GAAP EPS: Non-GAAP EPS was $0.01 for the fourth quarter of 2012 compared to $0.05 for the fourth quarter of 2011 and $0.00 for the third quarter of 2012.
Cash and cash flow: As of December 31, 2012, cash, cash equivalents and marketable securities were approximately $1.65 billion, compared to $1.65 billion as of September 30, 2012. Cash flow from operations was $19.8 million for the fourth quarter of 2012, compared to $164.0 million for the fourth quarter of 2011. Free cash flow was $29.5 million for the fourth quarter of 2012 compared to $101.9 million for the fourth quarter of 2011.
Share Repurchase Program: As of December 31, 2012, Zynga repurchased approximately 5 million shares of common stock under its stock repurchase program. The remaining authorized amount of stock repurchases that may be made under this plan was approximately $188 million as of December 31, 2012.
I think we all expected this result. Zynga started off 2012 doing pretty well for itself, but it made a few bad decisions in investments early on, including the acquisition of OMGPOP for $200 million. The company was also forced to shut down a few studios, lay off over 100 employees and stop hosting numerous games, including the hotly anticipated, but ultimately ignored Mafia Wars 2.
Zynga’s results may not have been great, but investors are somewhat pleased with its performance. The company’s stock was trading 7 percent higher at $2.74 at closing. It’s still rising in after-hours trading with the company’s share price currently at $2.88.
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