SEC Investigates Zynga’s Financials in Last-Minute IPO Talks

Requests more detailed player info

As it gears up for a November IPO, Zynga is holding its final round of talks with the Securities and Exchange Commission to address some last-minute issues. According to the New York Post, the SEC is requesting more detailed financial information to illustrate how, exactly, Zynga makes money off of its social games like FarmVille and Mafia Wars.

In its first public filing, Zynga was vague about its sources of income, saying only that it relies on a small percentage of users for revenue. In revised filings, Zynga disclosed that less than 5 percent of its gaming users are actually paying customers and that total sales for the first half of the year added up to $522,000, more than half of which came from Zynga’s top three games: FarmVille, Mafia Wars, and Zynga Poker.

Now, “The SEC wants more detail on the number of paying players, the amount that each of the paying players pays,” a source told the Post. “And they want more specific revenue information by games.”

Zynga is expected to file an updated report sometime this week, which will include updated information on its earnings and IPO share price. According to the Post’s source, the company will likely seek a higher valuation than Groupon’s $11.5 billion.