Zynga Files S-1, Plans to Go Public and Raise $1 Billion, Overcoming Credits Costs

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By Eric Eldon Comment

Zynga, the leading social gaming company on Facebook, has filed to go public today, submitting its S-1 document detailing its business to date and its prospective valuation. The long-speculated numbers are finally in. The company made $597 million in revenues over 2010, with $235 million in revenues for the first quarter of 2011. It expects to raise up to $1 billion in the offering, giving it lots of ammunition for expanding across mobile and social. Although the company also appears to be sitting on nearly $1 billion in cash.

Our Inside Virtual Goods report estimated that Zynga had made over $500 million in 2010, while other reports put it significantly higher.

Net income came in at $90.6 million for 2010, with $11.8 million so far for the first three months of this year. The introduction of Facebook Credits, the exclusive paid virtual currency for virtual goods purchases on Facebook, appears to be cutting into profits as it has been rolled out in recent months.

Here’s some of what Zynga says about Credits and its Facebook business in the doc:

“In July 2010, we began migrating to Facebook Credits as the primary payment method for our games played through Facebook, and by April 2011, we had completed this migration. Facebook remits to us an amount equal to 70% of the face value of Facebook Credits purchased by our players for use in our games. We record bookings and recognize revenue net of the amounts retained by Facebook.”

Facebook has continued to say that its goal around Credits is to make it more profitable than any alternatives for all involved. Investors will now be keen to figure out exactly how effective it might become.

Overall usage is what we’ve regularly covered in our AppData tracking service. It has 148 million monthly unique users, which clarifies the otherwise nondeduplicated total monthly active user count that we track by adding together the traffic for each app on Facebook. The number also includes mobile users. It has 60 million daily active users on Facebook, according to AppData, which it cites.

Bankers on the deal include Morgan Stanley, Goldman Sachs, Bank of America, Merrill Lynch, Barclays Capital, J.P. Morgan and Allen & Co.

Here’s the link to the filing. More to come.

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