Zynga Shows Off Strong Financials but Questions Remain Around Impact of Credits, Off-Facebook Revenue


By Eric Eldon Comment

It’s been a hectic four years since Zynga launched on the Facebook platform, and in most ways the business the company is now showing off to the public is extremely impressive. Revenue is on a run-rate towards $1 billion this year, following nearly $600 million last year, and the company’s games reach nearly 60 million people around the world every day. There’s a lot for investors to like once Zynga makes its initial public offering.

As you can see in the graphs we’ve made above and below using data from Zynga’s S-1 filing today, the company has grown its way to profitability, even as it faces an increasing set of costs associated with the business. Total revenue is climbing towards $250 million per quarter, and since last year it has been handily beating total costs.

Digging into the costs, you can see in the second graph that research and development has taken a bigger place at Zynga, which isn’t surprising given its push to improve its technology, build higher-quality games, and expand into new areas like mobile and a site it is reportedly working on called ZLive.

The weakness that many developers know well, and that the filing details in the risk section, is the company’s dependence on Facebook. It explicitly notes that communication channel changes and a variety of other factors that have and will affect the business, with Credits being the latest issue.

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