Zynga Trefis Analysis

Zynga
ANALYSIS for NASDAQ : ZNGA OCTOBER 28, 2013

$
3.33
$3 B MKT CAP
Trefis Estimate
$
$3 B MKT CAP
Market Price
See the Full Analysis for Zynga on Trefis
CORPORATE SNAPSHOT
Social games are generally web based games that use a variety of social
platforms such as Facebook, Google+ and MySpace to enable gaming
interaction. The features that make social gaming attractive include the
ability to track how well an individuals friends and other people within the
community are doing and the ability to have multiple players engaged at any
point in time if needed. The social aspect of these games makes gaming more
addictive and viral thereby attracting more users.
Founded in 2007, Zynga creates free social games such as FarmVille,
CityVille and Texas Holdem Poker. The company provides its games for
different platforms including Zynga Direct, Facebook, MySpace, iPhone,
Android and Google+.
Millions of people login to these platforms to play Zynga games, interact
with their friends and buy in-game items and virtual goods. Zynga also
operates Zynga.org which supports different philanthropic causes by utilizing
the power of virtual social goods.
VALUATION HIGHLIGHTS
Texas HoldEm Poker constitutes 23% of the Trefis price estimate for
Zynga's stock.
1.
New & Other Games constitute 20% of the Trefis price estimate for
Zynga's stock.
2.
See the Interactive Valuation Breakdown on Trefis
Our share price estimate and the overall company value is derived by
summing-up the values of individual divisions/businesses in a sum-of-the-
TEXAS HOLDEM POKER
6
Texas HoldEm Poker's Average
Revenue Per User (ARPU)
8
Monthly Active Users (MAU)
9 Zynga's Gross Margin
NEW & OTHER GAMES
11
Average Revenue Per User for New &
Other Games
13
Average Monthly Active Users for New
& Other Games
FARMVI LLE
17
FarmVille's Average Revenue Per User
(ARPU)
19
FarmVille's Average Monthly Active
Users (MAU)
CI TYVI LLE
22
CityVille's Average Revenue Per User
(ARPU)
24
CityVille's Average Monthly Active
Users (MAU)
CASTLEVI LLE
28
CastleVille's Average Revenue Per User
(ARPU)
30
CastleVille's Average Monthly Active
Users (MAU)
EMPI RES & ALLI ES
33
Empires & Allies Average Revenue Per
User (ARPU)
35
Empires & Allies Average Monthly
Active Users (MAU)
APPENDI CES
40 Summary P&L for Zynga
41
Detailed Texas HoldEm Poker
P&L
42
Detailed New & Other Games
P&L
43 Detailed FarmVille P&L
44 Detailed CityVille P&L
45 Detailed CastleVille P&L
46 Detailed Empires & Allies P&L
parts analysis. The value of each division is calculated using a discounted cash
flow (DCF) methodology.
We forecast fundamental drivers like pricing, market share, and profit
margins for different businesses in estimating the divisions value within the
DCF framework. The analysis below primarily focuses on those important
forecasts that drive our share price and value estimate.
Our complete analysis, including sources of historical data, underlying
equations and additional discussion are available on www.trefis.com.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
New & Other Games
Average Monthly Active Users:
We currently forecast the number of average monthly active users for
Zynga's new and other games (except top 5 games) to steadily increase,
reaching close to 190 million by the end of the forecast period. We
expect Zynga's new games to attract users and compensate for the
decline in the user base of its current and older games. However, if the
figure declines to 120 million instead, there can be 5-10% downside to our
price estimate. There can be upside of similar order if the figure reaches
300 million instead.
Texas HoldEm Poker

Average Monthly Active Users: Texas HoldEm Poker is one of Zynga's
oldest games, and one of its most valuable ones. It has continued to
attract more users over the years. For 2012, we estimate that the game's
monthly active users stood at around 36 million. Given the recent
weakness, we forecast this figure to increase just about 37-38 million by
the end of the forecast period, following the dip in 2013. However, if the
exodus of users that the company witnessed in Q2 2013 continues, and
the user base declines to around 25 million by the end of the forecast
period, there could be a 5-10% downside to its current Trefis price
estimate.
Marketing, Advertising & Operational Expenses

SG&A as a % of Revenue:
We currently expect Zynga's selling, advertising and operational
expenses (SG&A) to increase from around 23.5% in 2012 to 33% by the
end of the forecast period. Given the increasing competition in the social
gaming space, Zynga may have to spend much more to market and
advertise its games going forward. It may also have to ramp up its
operational expenses if it wants to expand at a faster pace.If the
company's SG&A expenses as a percentage of revenues increase to more
than 37% by the end of the forecast period, there could be a downside of
about 10% to our Trefis price estimate.
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Research & Development Expenses
R&D as a % of Revenue:
We currently expect Zynga's research and development expenses (R&D)
as percentage of revenues to increase to around 37% over the long term.
For 2013, the figure seems to be heading towards 42%. Given the
increasing competition in the social gaming space, Zynga may have to
spend much more on R&D to continue developing new and innovative
games in order to attract users. If the figure increases to 45%, there can
be 10-15% downside to our price estimate. On the other hand if the
figure declines to 30%, there could be an upside of roughly 10%.
SOURCES OF VALUE
Dominant social gaming website
Zynga had around 187 million monthly active users as of March 2013. Its
competitors Electronic Arts and Playdom have a smaller active user base.
Apart from leading the internet in terms of total number of active users,
Zynga's popularity is highlighted by the fact that 6 of its games stood in top
12 games on Facebook (ranking as of May 2013).
Growth in international markets
Growth in internet connectivity and the increase in use of social network has
enhanced the appeal of social gaming globally. In countries such as China,
the appeal of social gaming has already been quite strong.Zynga acquired
social gaming company XPD Media in China in 2010 as a way to expand its
presence in the region.
Competitive advantages
Zynga has become the webs most dominant social gaming website. Some of
its key competitive advantages are:
Strong capital position
Zynga currently has close to $1.2 billion of net cash, which
essentially constitutes roughly 45% of the company's
value as per our estimates.
Marketing advantage
Zyngas huge gaming audience enables it to market games to its
user for free. New game developers often have marketing budgets
of 50% of the cost of developing the game.
Ability to imitate games

Several of the most popular games currently on Zynga are similar
in nature and concept to those launched by other companies.
Zyngas largest game, FarmVille, is similar to Farmtown which
was launched earlier. Having a strong development team of more
than 1500 individuals enables the firm to operate in a competitive
way and produce high quality games that will attract more users.
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KEY TRENDS
Zynga to focus on mid core and real money gaming
The company expects its mid-core games to keep users engaged for longer
periods of time. A mid-core game tries to combine the engagement level of a
core game with the learning curve of a casual game, to provide an engaging
gaming experience to a larger user base. This can potentially allow for
retention of a large user base while promoting in-game purchases as the
games are designed to be more engaging and users are likely to pay to
upgrade, rather than drop off once the free-play scenarios are completed.
Zynga launched Battlezone in early 2013, which marks its foray into action
RPG (role playing game).
Zynga has also rolled out real-money games ZyngaPlusPoker and
ZyngaPlusCasino in the U.K. The online gambling market outside the U.S.
is worth more than $32 billion and Zynga can make a big difference to its
business if it can tap this market successfully. However, the company will
have to deal with the competition from gaming incumbents such as Caesars
Entertainment, which already operates online gambling services in Europe,
and has bought social and mobile game maker Playtika.
Due to lack of federal legislation, gambling is being introduced state-by-
state in the U.S. However, Zynga has dropped its plans of pursuing a license
in the country.
Reducing reliance on Facebook
Zynga has been actively reducing its dependence on Facebook for quite some
time. The relationship between the two companies can be described as
complicated at best. In Q1 2013, Zynga removed the requirement of Facebook
login in order to access games on its own website. The move comes a year
after the company launched its own platform for third party game developers.
Approximately 45% of Zyngas value comes from its cash pool with
another 25% coming from new and smaller games (other than FarmVille,
CityVille, CastleVille, Empires & Allies and Texas HoldEm Poker)
according to our estimates. In other words, a significant portion of our price
estimate relies on the expectation that Zynga will continue to launch
successful games. One way to ensure this is marketing third-party games,
which is what the company has been doing for a while.
Revenue concentration in games
Certain games such as FarmVille, FarmVille 2 and Texas HoldEm Poker
contribute the bulk of the revenues for Zynga as they represent majority of its
total daily active users (DAU). High dependence on certain games can
potentially be a risky strategy for social gaming companies.
Increasing penetration of social networks
We believe that there is still room for social networking phenomenon to
grow. While Facebook has over 1 billion active users, the reach of other social
networks such as Google+ is much lower. Even Facebook is yet to make an
impact in certain parts of the world. Zynga can leverage this potential growth
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of social networking platforms and promote its new and existing games.
See the Full Analysis for Zynga on Trefis
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Texas HoldEm Poker

The Texas HoldEm Poker division constitutes 23.4% of our $3.33 price estimate for this stock, based on our sum of the
parts analysis.The most important drivers for the Texas HoldEm Poker business are:
Texas HoldEm Poker's Average Revenue Per User (ARPU)
Texas HoldEm Poker's Average Monthly Active Users (MAU)
Zynga's Gross Margin

TEXAS HOLDEM POKER'S AVERAGE REVENUE PER USER (ARPU)

Texas HoldEm Poker's Average Revenue Per User (ARPU) denotes the dollar value of the average revenue generated by
Zynga per user in one month. Zynga generates this revenue primarily through the sale of virtual goods and advertising.
Zynga provides players with an option to use real money to buy virtual goods that help them in their gameplay.
Virtual goods come in a variety of different forms:
Functional Virtual Goods
These category of goods provide users with some functional benefit within the game. Some of the most common
examples include energy and weaponry

Decorative Virtual Goods
Decorative virtual goods are those types of goods that allow users to customize his/her online experiences to make it
more personal. Examples include clothing items, home goods etc.

Consumables
Consumable goods are those types of goods that provide users with some advantage such as health packs. Once
consumed, users may have to purchase more.

Texas HoldEm Poker's Average Revenue Per User (ARPU) ($)
2009 10 11 12 13 14 15 16 17 18 19 20
0. 00
0. 25
0. 50
0. 75
1. 00
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We estimate that Texas HoldEm Poker's Average Revenue Per User (ARPU) increased substantially in 2010 and 2011 as
the game gained huge popularity on Facebook. However this figure declined slightly in 2012 amounting to $1.06. Going
forward we expect the figure to remain more or less stable.

Forecast Rationale
Trefis considered following factors for its forecast:
Supporting:
ZYNGA'S TEXAS HOLDEM POKER IS STILL FACEBOOK'S TOP POKER GAME Zynga's Texas HoldEm Poker is still one of
the most popular games on Facebook and one of the top Facebook games of all time, with more than 36 million
monthly active users as of 2012. The networking effect is helping Zynga maintain its grip on the social poker market,
despite the numerous poker games that have been introduced to Facebook. We expect that as this game builds up a
bigger user base, Zynga will benefit from ad revenues and sale of virtual goods. The company has also introduced the
game on smartphones.
IMPROVEMENT IN MOBILE PAYMENT PLATFORMS Zynga and other gaming companies have started to develop
smartphone apps for their games in order to leverage the broader trend of higher smartphone usage. Mobile payment
services such as Zong and Boku work with different gaming platforms. These mobile payment services are expected
to provide smart-phone users an easy and quick way to purchase virtual goods for their game-play. There are variety
of other options available to social gamers to pay for virtual goods that include cash transactions via credit cards,
Paypal or site specific payment systems such as Facebook credits and prepaid cards offered by Zynga which are
available at various retailers.
COMPETITION COULD DRIVE DOWN PROCESSING FEE Competition from new social gaming portals such as Google+,
which take only a 5% cut from each transaction, could force Facebook to lower its 30% cut. This could help Zynga's
average revenue per user.
GROWING VIRTUAL GOODS MARKET The social gaming sector has witnessed remarkable growth in recent years and is
expected to continue to do so going forward. Growth in internet usage and social network penetration has helped
boost the social gaming market. According to a research study, the total time spent on social networks and online
games increased from 15.8% in June 2009 to 23% in 2011. We expect the time spent on social networks and online
games to increase further going forward. US virtual goods market was estimated to be around $2.9 billion in 2012. As
more users join social gaming platforms such as Facebook, more players are expected to join games from companies
such as Zynga etc . About 27 million users bought virtual goods via Facebook in 2012, up from 15 million in 2011. In
May 2010, Zynga entered Asian markets by acquiring, XPD Media, a Beijing-based social games studio. The overall
Asian virtual game market is growing and entering Asia's social gaming space should help Zynga's growth.
THE IMPACT OF ZYNGA REDUCING RELIANCE ON FACEBOOK Zynga announced its new social gaming network, Zynga
Direct, in October 2011. Going forward, the users will able to create their accounts on Zynga's own platform to play
its social games and the company's reliance on Facebook as a platform to promote its games will reduce. The effective
average revenue per user could increase as Zynga won't have to pay Facebook's 30% cut. It could also give Zynga
more leverage in negotiations about transaction fees.

Mitigating:
DIFFICULTIES IN EXPANDING THE PAYING USER BASE One of the main reasons why games are able to generate
revenues is their ability to attract and retain committed gamers. Given the time, effort and commitment required to
play and compete in social games, the potential revenue generating customers remain limited. Therefore, we don't
expect the average revenue per user to go up meaningfully.
WEAKNESS IN SUCCESSFUL FRANCHISES Zynga's famous franchises such as Farmville, Cityville, Empires & Allies
and others are facing weakness. The number of active users have declined and the company's explosive growth has
halted. In Q1 2013, Zyngas revenues declined by about 18% compared to the the first quarter of 2012 due to lower
number of monthly active users (MAU) and a decline in monetization. The companys overall MAU stood at 253
million in Q1 2013 down from 292 million for Q1 2012. Even a sequential comparison showed a strong decline in these
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metrics as Zyngas previously successful franchises lost users.
CONVERSION RATES ARE LOW Historically the conversion rate from playing users to paying has been very low
compared to traditional games. In 2010 CrowdStar stated that most social games just see 1%-3% of players converting
into paying customers.
ZYNGA ARRIVED LATE TO MOBILE PLATFROM In the Android market, Live Holdem Poker Pro is the top poker game
and has more number of downloads than Zynga HoldEm Poker. Considering the fact that people are shifting away
from traditional PC's and using smartphones and tablets more for their daily computing needs, this may be a problem
for Zynga.
Sources for historical data and explanations can be found on the Trefis.com website (link)

TEXAS HOLDEM POKER'S AVERAGE MONTHLY ACTIVE USERS (MAU)

Monthly Active Users represent the number of unique active users who played a game in a month. If a user logs in three
times a month, it is still counted as one unique user. This is a widely used metric used to measure the number of users in
social games. We calculate Texas HoldEm Poker's Average Monthly Active Users (MAU) by computing the average of
the MAU numbers over the entire year.

Zynga Poker (Texas HoldEm Poker), which was launched in June 2007, had more than 36 million monthly active users in
2012. The figure has consistently increased since the game's launch, but the growth rate has come down significantly.
Going by the recent trends, we expect it to continue to grow going forward, albeit at a slow pace.

Forecast Rationale
Supporting:
TEXAS HOLDEM IS STILL VERY POPULAR Texas HoldEm is still one of the top games on Facebook and the
smartphone version is seeing significant traction as well. The game had over 36 million monthly active users in 2012,
and its average revenue per user stood better than other Zynga games. The advantage for games such as poker is that
Texas HoldEm Poker's Average Monthly Active Users (MAU) (Mil)
2009 10 11 12 13 14 15 16 17 18 19 20
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15
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25
30
35
40
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the users play against each other which keeps their interest high. This translates into better user engagement and
therefore higher number of monthly active users. Unlike campaign based games, users do not stop playing once the
novelty wears off. In fact, they tend to play more as their skills improve.
MOBILE GAMING MARKET EXPECTED TO GROW RAPIDLY Social gaming companies are expanding aggressively to
mobile platform. Zynga has already launched its popular games such as FarmVille, CityVille and Words with Friends
on iOS. In addition to this, the company has also introduced some other games on mobile devices such as Scramble
with Friends and Running with Friends, which is Zynga's version of popular mobile game Temple run. The U.S.
mobile virtual gaming market stood at $500 million in 2012, and is expected to grow rapidly in the near future.
According to Nielsen data, close to 60% of the U.S. mobile owners were using smartphone during the period of
March-May 2013. This figure has increased rapidly over the past few years and the trend is likely to continue. The
growth in the number of smartphone users and improving smartphone capabilities will drive the growth in mobile
gaming market.
ALTERNATIVE TO CONSOLE GAMING One of the biggest benefits of social gaming is that it does not require any
hardware and expensive consoles to operate unlike PC and console based games. Additionally, several console based
services such as Xbox Live charge a subscription fee for certain titles. Social games, on the other hand, can be
accessed anywhere at any time and are mostly free to use. Several key technology players such as Microsoft have been
trying to make inroads in the social gaming space. In late 2010, the firm introduced a new gaming hub that connects
its three main social gaming portals allowing users of MSN Games, Bing Games and Windows Live Messenger the
ability to play games with their friends in a more social manner.
SHIFT TOWARDS BROWSER BASED GAMES Historically, the majority of games have been distributed in the form of
physical media or a downloadable format. Advances in browsers and Flash technology have provided the ability for
social developers to create more graphically intensive and rich games. These advancements have enabled Zynga to
develop more unique and strategy oriented games, a shift from the traditional card playing and classic role playing
games.

Mitigating:
COMPETITION FROM OTHER PLAYERS The social gaming market is becoming competitive as the cost of developing
games is low. Zynga will continue to face competition from other internet and gaming giants such as Google, EA
Games and Disney (Playdom), who are trying to enter the space owing to the immense popularity that social gaming
has seen in the past few years. In Augus 2010, Google acquired social game and app developer Slide and mobile social
game developer Social Deck to strengthen its position in the social gaming market. EA acquired Playfish in 2009 and
PopCap games in 2011 to compete with Zynga in this space.

ZYNGA'S GROSS MARGIN

Zynga's Gross Margin represents the company's gross profit (revenues - cost of goods sold) expressed as a percentage of
revenues.
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Zynga's gross margin increased from 53.7% in 2009 to 73.5% in 2012. The growth was steep in 2010 because of a new
agreement with Facebook wherein Zynga switched over to Facebook Credits for transactions. Before that, it used to
report its revenues from direct payment options and included the payment processing fees in its cost of revenues which led
to higher cost of goods. Since 2010, the company started reporting revenues net of the 30% cut retained by Facebook. This
change in reporting structure has resulted in a substantial increase in the company's gross margin. Going forward, we
expect this figure to remain more or less stable.

Forecast Rationale
Supporting:
ZYNGA REDUCING RELIANCE ON FACEBOOK Zynga announced its new social gaming network, Zynga Direct, in
October 2011. Going forward, the users will able to create their accounts on Zynga's own platform to play its social
games and the company's reliance on Facebook as a platform to promote its games will reduce. The effective average
revenue per user could increase as Zynga won't have to pay Facebook's 30% cut. As more users shift to from Facebook
to Zynga's platform, both the average revenue per user and gross margins will find some support.
ZYNGA BUILDING ITS OWN DATA CENTERS Zynga primarily uses cloud computing infrastructure provided by
Amazon Web Services to host and distribute its games, which constitutes a significant portion of its 'cost of revenue'.
The company has announced that it will be investing in building its own infrastructure and data centers which should
lead to lower costs thereby supporting the margins.
FOCUS ON MID-CORE GAMES AND REAL MONEY GAMING The company intends to focus on mid-core games and real
money gaming. A mid-core game can potentially allow for retention of a large user base while promoting in-game
purchases as the games are designed to be more engaging and users are likely to pay to upgrade, rather than drop off
once the free-play scenarios are completed. In addition to this, Zynga has also rolled out real-money games
ZyngaPlusPoker and ZyngaPlusCasino in the U.K. The online gambling market outside the U.S. is worth more than
$32 billion and Zynga can make a big difference to its business if it can tap this market successfully. These new
ventures will help the company in mitigating the negative impact of weakness in its famous franchises, thus offering
some support to revenues and gross margin.

Zynga's Gross Margin (%)
2009 10 11 12 13 14 15 16 17 18 19 20
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Mitigating:
INCREASE IN PAYMENT PROCESSING FEE AS ZYNGA EXPANDS ON MOBILE Zynga stated during its Q4 2012 earnings
that as it expands on mobile platform, more of its revenues will be accounted on gross basis implying that the
processing fee from companies such as Apple and Google will be included in costs of goods sold. This will have a
negative impact on gross margin.
metrics as Zyngas previously successful franchises lost users. This weakness has put pressure on average revenue per
user. If this pressure continues, it may be difficult for the company to grow its margin.

In addition, you can see the detailed P&L for the Texas HoldEm Poker business in the Appendix (link)

New & Other Games

The most important drivers for the New & Other Games business are:
Average Revenue Per User for New & Other Games
Average Monthly Active Users for New & Other Games

AVERAGE REVENUE PER USER FOR NEW & OTHER GAMES

Average Revenue Per User for New & Other Games denotes the dollar value of the average revenue generated by Zynga
per user in one month. Zynga generates this revenue primarily through the sale of virtual goods and advertising.


Consumables
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue (Mil $) 51.3 243 477 462 374 385 397 409 421 434 447 460
Direct Expense (Mil $) 23.7 70.9 130 122 97.5 101 105 109 113 118 123 128
Indirect Expense (Mil $) 60.1 49.5 284 252 162 173 186 197 209 220 258 270
Gross Profit (Mil $) 27.5 172 346 339 277 284 291 299 307 315 324 332
Free Cash Flow (Mil $) n/a n/a n/a n/a 114 111 105 102 98.3 94.9 65.2 62.0
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We do not calculate average revenue per user for individual games except poker. The figure referred to here is a combined
metric estimated for all of Zynga's games (except poker). Average Revenue Per User for New & Other Games jumped
sharply in 2011 as Zynga's games gained huge popularity on Facebook. However, the figure declined slightly in 2012
amounting to $0.27. This decline can be attributed to recent weakness in social gaming in general, and Zynga in particular.
A lot of competitors have cropped up and Zynga's once famous franchises are losing fans.
Going forward, we expect the figure to remain stable due to the mixed impact of Zynga focusing on mid-core games
and real money gaming, and continued weakness of existing franchises.

Forecast Rationale
Supporting:
ZYNGA TO FOCUS ON MID-CORE AND REAL MONEY GAMES The company expects its mid-core games to keep users
engaged for longer periods of time. A mid-core game tries to combine the engagement level of a core game with the
learning curve of a casual game, to provide an engaging gaming experience to a larger user base. This can potentially
allow for retention of a large user base while promoting in-game purchases as the games are designed to be more
engaging and users are likely to pay to upgrade, rather than drop off once the free-play scenarios are completed.
Zynga launched Battlezone in early 2013, which marks its foray into action RPG (role playing game). Zynga has also
rolled out real-money games ZyngaPlusPoker and ZyngaPlusCasino in the U.K. The online gambling market outside
the U.S. is worth more than $32 billion and Zynga can make a big difference to its business if it can tap this market
successfully. However, the company will have to deal with the competition from gaming incumbents such as Caesars
Entertainment, which already operates online gambling services in Europe, and has bought social and mobile game
maker Playtika. Due to lack of federal legislation, gambling is being introduced state-by-state in the U.S., and Zynga
has already applied for operator license in Nevada. The U.S. online gambling market can reach $7.4 billion in the next
4 to 5 years, and Zynga will strive to be one of the leading operators driving this growth. However, the company will
have to compete against popular gaming providers and casino operators, who have significant mind share with
Average Revenue Per User for New & Other Games ($)
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0. 20
0. 25
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gamers.

Mitigating:

AVERAGE MONTHLY ACTIVE USERS FOR NEW & OTHER GAMES

social games. We calculate Average Monthly Active Users for New & Other Games by computing the average of the
MAU numbers over the entire year.
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Other games include all new games by Zynga, as well as its existing ones except the current top 5 games. In 2010, the
company had nearly 125 million monthly active users for its other games. The number declined to less than 60 million in
2011 before increasing to nearly 190 million in 2012 due to new launches. Going forward, we expect the figure to continue
to increase.

Forecast Rationale
Supporting:
NEW GAMES TO ATTRACT CURRENT PLAYERS Simulation gaming is a dynamic space where different games are
fighting for user base. Most users switch to newer games after a while and therefore, we expect most of Zynga's
current games including FarmVille, CityVille and CastleVille to show a decline in their monthly active users. To
compensate for this, the company will continue to invest in development of new games that can drive the growth in
its overall monthly active users.
gaming market.
accessed anywhere at any time and are mostly free to use. Several key technology players such as Microsoft have been
trying to make inroads in the social gaming space. In late 2010, the firm introduced a new gaming hub that connects
its three main social gaming portals allowing users of MSN Games, Bing Games and Windows Live Messenger the
Average Monthly Active Users for New & Other Games (Mil)
2009 10 11 12 13 14 15 16 17 18 19 20
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25
50
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100
125
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175
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ability to play games with their friends in a more social manner.
games.

Mitigating:


revenues.

2009 10 11 12 13 14 15 16 17 18 19 20
0
10
20
30
40
50
60
70
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ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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1.
2.
3.
4.
5.
Forecast Rationale
Supporting:

Mitigating:

In addition, you can see the detailed P&L for the New & Other Games business in the Appendix (link)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue (Mil $) 46.0 239 202 599 356 366 385 400 416 428 441 455
Direct Expense (Mil $) 21.3 69.8 55.5 159 92.7 96.4 102 107 112 117 121 126
Indirect Expense (Mil $) 53.9 48.6 120 327 154 164 180 193 206 218 255 267
Gross Profit (Mil $) 24.7 169 147 440 263 270 282 293 303 311 320 328
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ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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FarmVille

The most important drivers for the FarmVille business are:
FarmVille's Average Revenue Per User (ARPU)
FarmVille's Average Monthly Active Users (MAU)

FARMVILLE'S AVERAGE REVENUE PER USER (ARPU)

FarmVille's Average Revenue Per User (ARPU) denotes the dollar value of the average revenue generated by Zynga per
user in one month. Zynga generates this revenue primarily through the sale of virtual goods and advertising.


Consumables

metric estimated for all of Zynga's games (except poker). FarmVille's Average Revenue Per User (ARPU) jumped sharply
FarmVille's Average Revenue Per User (ARPU) ($)
2009 10 11 12 13 14 15 16 17 18 19 20
0. 00
0. 05
0. 10
0. 15
0. 20
0. 25
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ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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2.
3.
4.
5.
6.
7.
in 2011 as Zynga's games gained huge popularity on Facebook. However, the figure declined slightly in 2012 amounting to
$0.27. This decline can be attributed to recent weakness in social gaming in general, and Zynga in particular. A lot of
competitors have cropped up and Zynga's once famous franchises are losing fans.

Forecast Rationale
Supporting:
PREMIUM CROPS AND CROP MASTERY DRIVES VIRTUAL GOODS REVENUE Higher levels of crop mastery gives faster
and better yields and premium crops provide users with bigger harvests and more rewards. As users become invested
in the game and want to unlock achievements faster, they tend to spend money on premium content. Considering
FarmVille's ability to keep users engaged, we can expect the game to sustain its monetization to some extent.
VIRTUAL MERCHANDISE TO DRIVE REVENUES CastleVille users who have spent significant time building up the
virtual lands and castles, and unlocking levels, tend to spend money on virtual goods to enhance game-play. Though
users tend to drop off or lose interest with time, those who continue playing invest in virtual goods and provide a
market for their sales.

Mitigating:
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ANALYSIS for ZYNGA

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8.
9.

FARMVILLE'S AVERAGE MONTHLY ACTIVE USERS (MAU)

social games. We calculate FarmVille's Average Monthly Active Users (MAU) by computing the average of the MAU
numbers over the entire year.

FarmVille, which was launched in June 2009, had approximately 30 million monthly active users that year. This figure
jumped to nearly 60 million in 2010 as the game gained huge popularity on Facebook. However, it has declined for the
past two years amounting to 23 million in 2012 as users continue to shift to new games. We expect this trend to continue
going forward.

Forecast Rationale
Supporting:
FarmVille's Average Monthly Active Users (MAU) (Mil)
2009 10 11 12 13 14 15 16 17 18 19 20
0
10
20
30
40
50
60
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1.
2.
3.
4.
5.
6.
7.
LIKE MOST OTHER SOCIAL GAMES, FARMVILLE'S LONG-TERM USER ENGAGEMENT CAPABILITY IS UNDER DOUBT
FarmVille is a farming simulation social networking game which was launched in 2009 and is still quite popular with
Facebook users. The game faces competition from Farm Town and Happy Farm. It appears that the novelty effect is
wearing off as the game's monthly active users have declined in the past two years. Unlike Texas HoldEm, FarmVille
user's interest tends to decline once he/she has unlocked several levels and achievements. Users also tend to drop off
once the purchase of virtual goods become necessary to enjoy the gameplay.
fighting for user base. Most users switch to newer games after a while and therefore we expect FarmVille's Average
Monthly Active Users (MAU) to decline going forward. Most games including CityVille and CastleVille will
continue to show a similar decline.

Mitigating:
gaming market.
accessed anywhere at any time and are mostly free to use.
Several key technology players such as Microsoft have been trying to make inroads in the social gaming space. In late
2010, the firm introduced a new gaming hub that connects its three main social gaming portals allowing users of
MSN Games, Bing Games and Windows Live Messenger the ability to play games with their friends in a more social
manner.
games.


revenues.
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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1.
2.
3.


Forecast Rationale
Supporting:

2009 10 11 12 13 14 15 16 17 18 19 20
0
10
20
30
40
50
60
70
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 21
4.
5.
Mitigating:

In addition, you can see the detailed P&L for the FarmVille business in the Appendix (link)

CityVille

The most important drivers for the CityVille business are:
CityVille's Average Revenue Per User (ARPU)
CityVille's Average Monthly Active Users (MAU)

CITYVILLE'S AVERAGE REVENUE PER USER (ARPU)

CityVille's Average Revenue Per User (ARPU) denotes the dollar value of the average revenue generated by Zynga per


Consumables
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue (Mil $) 24.2 114 129 73.7 76.3 79.3 79.3 75.4 71.6 68.0 64.6 64.6
Direct Expense (Mil $) 11.2 33.2 35.5 19.6 19.9 20.9 21.1 20.2 19.4 18.6 17.8 18.0
Indirect Expense (Mil $) 28.4 23.2 77.1 40.3 33.1 35.7 37.2 36.3 35.5 34.6 37.4 38.0
Gross Profit (Mil $) 13.0 80.9 93.9 54.2 56.5 58.5 58.3 55.2 52.2 49.5 46.8 46.7
Free Cash Flow (Mil $) n/a n/a n/a n/a 23.4 22.8 21.1 18.8 16.7 14.9 9.42 8.70
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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1.
2.
3.

metric estimated for all of Zynga's games (except poker). CityVille's Average Revenue Per User (ARPU) jumped sharply

Forecast Rationale
Supporting:
INCENTIVE FOR USERS TO CONTINUE BUYING VIRTUAL GOODS CityVille users are more likely to purchase virtual
goods and stay on in the game, if they have already spent significant time and money building up the city. This makes
it a barrier to exit the game and start over from scratch in another city-building game. These users prefer to spend
time and money in the current established game as the switching costs are high.
CityVille's Average Revenue Per User (ARPU) ($)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0. 00
0. 05
0. 10
0. 15
0. 20
0. 25
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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4.
5.
6.
7.
8.

Mitigating:

CITYVILLE'S AVERAGE MONTHLY ACTIVE USERS (MAU)

social games. We calculate CityVille's Average Monthly Active Users (MAU) by computing the average of the MAU
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 24
1.
2.
3.
4.

CityVille, which was launched at the end of 2010, had close to 77.5 million monthly active users in 2011. This figure fell to
around 23 million in 2012. Going forward, we expect the decline to continue as users shift to newer games.

Forecast Rationale
Supporting:
LIKE MOST OTHER SOCIAL GAMES, CITYVILLE'S LONG-TERM USER ENGAGEMENT CAPABILITY IS UNDER DOUBT
CityVille is set in an urban situation and is a social city building game. The game is facing competition from other
games such SIMS, which was launched by EA and has taken away some market share. CityVille has lost some of its
novelty factor since its launch in 2010. Unlike Texas HoldEm, CityVille user's interest tends to decline once he/she
has unlocked several levels and achievements. Users also tend to drop off once the purchase of virtual goods become
necessary to enjoy the gameplay.
fighting for user base. Most users switch to newer games after a while and therefore we expect CityVille's Average
Monthly Active Users (MAU) to decline going forward. Most games including FarmVille and CastleVille will
continue to show a similar decline.

Mitigating:
CityVille's Average Monthly Active Users (MAU) (Mil)
2009 10 11 12 13 14 15 16 17 18 19 20
0
10
20
30
40
50
60
70
80
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ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 25
5.
6.
7.
gaming market.
manner.
games.


revenues.

2009 10 11 12 13 14 15 16 17 18 19 20
0
10
20
30
40
50
60
70
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 26
1.
2.
3.
4.
5.

Forecast Rationale
Supporting:

Mitigating:

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue (Mil $) 0.00 0.00 260 74.2 43.4 34.7 29.5 26.6 23.9 21.5 20.4 20.4
Indirect Expense (Mil $) 0.00 0.00 155 40.6 18.8 15.6 13.8 12.8 11.9 10.9 11.8 12.0
Gross Profit (Mil $) 0.00 0.00 189 54.5 32.1 25.6 21.7 19.5 17.5 15.7 14.8 14.8
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 27
In addition, you can see the detailed P&L for the CityVille business in the Appendix (link)

CastleVille

The most important drivers for the CastleVille business are:
CastleVille's Average Revenue Per User (ARPU)
CastleVille's Average Monthly Active Users (MAU)

CASTLEVILLE'S AVERAGE REVENUE PER USER (ARPU)

CastleVille's Average Revenue Per User (ARPU) denotes the dollar value of the average revenue generated by Zynga per


Consumables
CastleVille's Average Revenue Per User (ARPU) ($)
2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0. 00
0. 05
0. 10
0. 15
0. 20
0. 25
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 28
1.
2.
3.
4.
5.
6.
7.
metric estimated for all of Zynga's games (except poker). CastleVille's Average Revenue Per User (ARPU) jumped sharply

Forecast Rationale
Supporting:
VIRTUAL MERCHANDISE TO DRIVE REVENUES CastleVille users who have spent significant time building up the
virtual lands and castles, and unlocking levels, tend to spend money on virtual goods to enhance game-play. Though
users tend to drop off or lose interest with time, those who continue playing invest in virtual goods and provide a
market for their sales.

Mitigating:
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 29
8.
1.

CASTLEVILLE'S AVERAGE MONTHLY ACTIVE USERS (MAU)

social games. We calculate CastleVille's Average Monthly Active Users (MAU) by computing the average of the MAU

CastleVille, which was launched in November 2011, had approximately 15 million monthly active users in 2012. Although
the user count increased substantially in 2012, we expect it to decline going forward.

Forecast Rationale
Supporting:
LIKE MOST OTHER SOCIAL GAMES, CASTLEVILLE'S LONG-TERM USER ENGAGEMENT CAPABILITY IS UNDER DOUBT
CastleVille is set in a medieval environment, where users explore their virtual lands and build castles. The reputation
mechanism helps users unlock levels and achievements and is quite engaging. The game has faced competition from
other games such as SIMS, but is still one of the top games in its category. CastleVille was extremely well received by
the social gaming community on its launch and MAU reached 26.5 million. The game has since lost some of its
novelty factor. Unlike Texas HoldEm, CastleVille user's interest tends to decline once he/she has unlocked several
CastleVille's Average Monthly Active Users (MAU) (Mil)
2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0. 0
2. 5
5. 0
7. 5
10. 0
12. 5
15. 0
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 30
2.
3.
4.
5.
6.
levels and achievements. Users also tend to drop off once the purchase of virtual goods become necessary to enjoy the
gameplay.
fighting for user base. Most users switch to newer games after a while and therefore we expect CastleVille's Average
Monthly Active Users (MAU) to decline going forward. Most games including FarmVille and CityVille will continue
to show a similar decline.

Mitigating:
gaming market.
manner.
games.


revenues.
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 31
1.
2.
3.

expect this figure to slightly decline, and remain more or less stable.

Forecast Rationale
Supporting:

2009 10 11 12 13 14 15 16 17 18 19 20
0
10
20
30
40
50
60
70
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 32
4.
5.
Mitigating:

In addition, you can see the detailed P&L for the CastleVille business in the Appendix (link)

Empires & Allies

The most important drivers for the Empires & Allies business are:
Empires & Allies Average Revenue Per User (ARPU)
Empires & Allies Average Monthly Active Users (MAU)

EMPIRES & ALLIES AVERAGE REVENUE PER USER (ARPU)

Empires & Allies Average Revenue Per User (ARPU) denotes the dollar value of the average revenue generated by Zynga
per user in one month. Zynga generates this revenue primarily through the sale of virtual goods and advertising.


Consumables
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue (Mil $) 0.00 0.00 8.40 47.9 28.0 22.4 19.1 17.1 15.4 13.9 13.2 13.2
Gross Profit (Mil $) 0.00 0.00 6.10 35.2 20.7 16.5 14.0 12.6 11.3 10.1 9.56 9.53
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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1.
2.
3.

metric estimated for all of Zynga's games (except poker). Empires & Allies Average Revenue Per User (ARPU) jumped
sharply in 2011 as Zynga's games gained huge popularity on Facebook. However, the figure declined slightly in 2012
amounting to $0.27. This decline can be attributed to recent weakness in social gaming in general, and Zynga in particular.
A lot of competitors have cropped up and Zynga's once famous franchises are losing fans.

Forecast Rationale
Supporting:
VIRTUAL WARS TO CAN ENTICE USERS Once users have unlocked levels, powers and characters, they spend money to
purchase Empire extras and boosters to keep their armies strong and this virtual weapons escalation among the top
players keeps the sales of virtual goods high. We can expect this to continue as there are few popular alternatives to
this game on Facebook.
Empires & Allies Average Revenue Per User (ARPU) ($)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0. 00
0. 05
0. 10
0. 15
0. 20
0. 25
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 34
4.
5.
6.
7.
8.

Mitigating:

EMPIRES & ALLIES AVERAGE MONTHLY ACTIVE USERS (MAU)

social games. We calculate Empires & Allies Average Monthly Active Users (MAU) by computing the average of the
MAU numbers over the entire year.
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 35

Empires & Allies, which was launched in June 2011, had roughly 7.4 million monthly active users in 2012. As Zynga plans
to shut down this game in Q2 2013, number of monthly active users will fall to zero.

Zynga's Gross Margin represents the company's gross profit (revenues - cost of goods sold) expressed as a percentage
of revenues.
Empires & Allies Average Monthly Active Users (MAU) (Mil)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0. 0
2. 5
5. 0
7. 5
10. 0
12. 5
15. 0
17. 5
2009 10 11 12 13 14 15 16 17 18 19 20
0
10
20
30
40
50
60
70
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 36
1.
2.
3.
4.
5.

Forecast Rationale
Supporting:

Mitigating:

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenue (Mil $) 0.00 0.00 62.2 23.6 4.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Gross Profit (Mil $) 0.00 0.00 45.1 17.4 3.15 0.00 0.00 0.00 0.00 0.00 0.00 0.00
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 37
In addition, you can see the detailed P&L for the Empires & Allies business in the Appendix (link)

TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 38
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TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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Appendix

Summary P&L for Zynga

Summary P&L for Zynga
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Revenues (Bil $) 0.12 0.60 1.14 1.28 0.88 0.89 0.91 0.93 0.95 0.97 0.99 1.01
Texas HoldEm Poker (% of total) 42.2 40.8 41.9 36.1 42.4 43.4 43.7 44.1 44.4 44.9 45.3 45.4
New & Other Games (% of total) 37.9 40.1 17.8 46.8 40.3 41.2 42.3 43.1 43.9 44.4 44.7 44.9
FarmVille (% of total) 19.9 19.1 11.3 5.76 8.65 8.93 8.72 8.12 7.55 7.04 6.55 6.37
CityVille (% of total) 0.00 0.00 22.8 5.79 4.92 3.91 3.24 2.86 2.52 2.23 2.07 2.02
CastleVille (% of total) 0.00 0.00 0.74 3.74 3.17 2.52 2.09 1.85 1.63 1.44 1.34 1.30
Empires & Allies (% of total) 0.00 0.00 5.45 1.84 0.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Direct Expenses (Mil $) 56.3 173 312 340 229 233 241 248 256 263 271 281
Gross Profit (Mil $) 65.2 423 827 941 652 655 668 679 692 702 715 732
Indirect Expenses (Mil $) 142 121 679 700 382 399 426 447 471 491 571 595
Free Cash Flow (Mil $) n/a n/a n/a n/a 270 255 241 232 221 211 143 136
Texas HoldEm Poker (% of total) n/a n/a n/a n/a 42.4 43.4 43.7 44.1 44.4 44.9 45.3 45.4
New & Other Games (% of total) n/a n/a n/a n/a 40.3 41.2 42.3 43.1 43.9 44.4 44.7 44.9
FarmVille (% of total) n/a n/a n/a n/a 8.65 8.93 8.72 8.12 7.55 7.04 6.55 6.37
CityVille (% of total) n/a n/a n/a n/a 4.92 3.91 3.24 2.86 2.52 2.23 2.07 2.02
CastleVille (% of total) n/a n/a n/a n/a 3.17 2.52 2.09 1.85 1.63 1.44 1.34 1.30
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

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Detailed P&L for the Texas HoldEm Poker
business

The most important drivers for the Texas HoldEm Poker business are discussed above, here is the detailed P&L.

Summary P&L for Zynga continued
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Empires & Allies (% of total) n/a n/a n/a n/a 0.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Texas HoldEm Poker: Detailed P&L
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues
Texas HoldEm Poker revenues (Mil
$)
51.3 243 477 462 374 385 397 409 421 434 447 460
15.6 31.9 35.5 36.2 32.6 33.6 34.6 35.6 36.7 37.8 38.9 40.1
0.27 0.64 1.12 1.06 0.96 0.96 0.96 0.96 0.96 0.96 0.96 0.96
Total Revenues (Mil $) 51.3 243 477 462 374 385 397 409 421 434 447 460
Expenses
Direct Expenses (Mil $) 23.7 70.9 130 122 97.5 101 105 109 113 118 123 128
Zynga's Gross Margin (%) 53.7 70.9 72.6 73.5 74.0 73.7 73.5 73.2 73.0 72.7 72.5 72.2
Indirect Expenses (Mil $) 60.1 49.5 284 252 162 173 186 197 209 220 258 270
SG&A Expenses as % of
Revenues (%)
53.3 22.3 24.6 23.5 25.0 26.5 28.0 29.0 30.0 31.0 32.0 33.0
R&D Expenses as % of Revenues
(%)
40.5 23.3 30.9 34.7 41.7 40.7 39.7 38.7 37.7 36.7 36.7 36.7
Increase in Net Working Capital
as % of Revenue (%)
n/a -27.9 -8.76 -6.96 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7
Increase in Net Operating Assets
as % of Revenue (%)
n/a -6.34 0.54 2.85 4.79 4.79 4.79 4.79 4.87 4.80 4.79 4.79
Capital Expenditures as % of
Revenue (%)
32.0 9.51 20.9 7.65 3.45 4.45 5.45 6.45 7.45 8.45 9.45 9.45
Stock Based Compensation % of
Operating Expenses (%)
2.34 5.76 63.5 25.9 20.9 15.9 10.9 5.95 2.95 2.95 2.95 2.95
Tax Rate (%) 0.00 28.4 0.59 -31.3 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 30.0
Total Expenses (Mil $) 83.8 120 415 375 259 274 291 306 323 339 382 398
Gross Profit (Mil $) 27.5 172 346 339 277 284 291 299 307 315 324 332
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 41
Detailed P&L for the New & Other Games
business

The most important drivers for the New & Other Games business are discussed above, here is the detailed P&L.

New & Other Games: Detailed P&L
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues
New & Other Games revenues (Mil
$)
46.0 239 202 599 356 366 385 400 416 428 441 455
Average Monthly Active Users for
New & Other Games (Mil)
56.1 125 60.2 187 123 127 134 139 144 149 153 158
Average Revenue Per User for
New & Other Games ($)
0.07 0.16 0.28 0.27 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
Total Revenues (Mil $) 46.0 239 202 599 356 366 385 400 416 428 441 455
Expenses
Direct Expenses (Mil $) 21.3 69.8 55.5 159 92.7 96.4 102 107 112 117 121 126
Indirect Expenses (Mil $) 53.9 48.6 120 327 154 164 180 193 206 218 255 267
Revenues (%)
53.3 22.3 24.6 23.5 25.0 26.5 28.0 29.0 30.0 31.0 32.0 33.0
(%)
40.5 23.3 30.9 34.7 41.7 40.7 39.7 38.7 37.7 36.7 36.7 36.7
as % of Revenue (%)
n/a -27.9 -8.76 -6.96 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7
as % of Revenue (%)
n/a -6.34 0.54 2.85 4.79 4.79 4.79 4.79 4.87 4.80 4.79 4.79
Revenue (%)
32.0 9.51 20.9 7.65 3.45 4.45 5.45 6.45 7.45 8.45 9.45 9.45
2.34 5.76 63.5 25.9 20.9 15.9 10.9 5.95 2.95 2.95 2.95 2.95
Tax Rate (%) 0.00 28.4 0.59 -31.3 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 30.0
Total Expenses (Mil $) 75.2 118 176 486 246 261 282 300 319 335 377 393
Gross Profit (Mil $) 24.7 169 147 440 263 270 282 293 303 311 320 328
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 42
Detailed P&L for the FarmVille business

The most important drivers for the FarmVille business are discussed above, here is the detailed P&L.

FarmVille: Detailed P&L
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues
FarmVille Revenues (Mil $) 24.2 114 129 73.7 76.3 79.3 79.3 75.4 71.6 68.0 64.6 64.6
FarmVille's Average Monthly
Active Users (MAU)
29.5 59.8 38.5 23.1 26.6 27.9 27.9 26.5 25.2 23.9 22.7 22.7
FarmVille's Average Revenue Per
User (ARPU)
0.07 0.16 0.28 0.27 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
Total Revenues (Mil $) 24.2 114 129 73.7 76.3 79.3 79.3 75.4 71.6 68.0 64.6 64.6
Expenses
Direct Expenses (Mil $) 11.2 33.2 35.5 19.6 19.9 20.9 21.1 20.2 19.4 18.6 17.8 18.0
Indirect Expenses (Mil $) 28.4 23.2 77.1 40.3 33.1 35.7 37.2 36.3 35.5 34.6 37.4 38.0
Revenues (%)
53.3 22.3 24.6 23.5 25.0 26.5 28.0 29.0 30.0 31.0 32.0 33.0
(%)
40.5 23.3 30.9 34.7 41.7 40.7 39.7 38.7 37.7 36.7 36.7 36.7
as % of Revenue (%)
n/a -27.9 -8.76 -6.96 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7
as % of Revenue (%)
n/a -6.34 0.54 2.85 4.79 4.79 4.79 4.79 4.87 4.80 4.79 4.79
Revenue (%)
32.0 9.51 20.9 7.65 3.45 4.45 5.45 6.45 7.45 8.45 9.45 9.45
2.34 5.76 63.5 25.9 20.9 15.9 10.9 5.95 2.95 2.95 2.95 2.95
Tax Rate (%) 0.00 28.4 0.59 -31.3 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 30.0
Total Expenses (Mil $) 39.6 56.4 112 59.9 53.0 56.5 58.3 56.5 54.9 53.2 55.2 55.9
Gross Profit (Mil $) 13.0 80.9 93.9 54.2 56.5 58.5 58.3 55.2 52.2 49.5 46.8 46.7
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 43
Detailed P&L for the CityVille business

The most important drivers for the CityVille business are discussed above, here is the detailed P&L.

CityVille: Detailed P&L
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues
CityVille Revenues (Mil $) 0.00 0.00 260 74.2 43.4 34.7 29.5 26.6 23.9 21.5 20.4 20.4
CityVille's Average Monthly
Active Users (MAU)
0.00 0.00 77.5 23.2 15.1 12.1 10.3 9.25 8.32 7.49 7.12 7.12
CityVille's Average Revenue Per
User (ARPU)
n/a n/a 0.28 0.27 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
Total Revenues (Mil $) 0.00 0.00 260 74.2 43.4 34.7 29.5 26.6 23.9 21.5 20.4 20.4
Expenses
Indirect Expenses (Mil $) 0.00 0.00 155 40.6 18.8 15.6 13.8 12.8 11.9 10.9 11.8 12.0
Revenues (%)
53.3 22.3 24.6 23.5 25.0 26.5 28.0 29.0 30.0 31.0 32.0 33.0
(%)
40.5 23.3 30.9 34.7 41.7 40.7 39.7 38.7 37.7 36.7 36.7 36.7
as % of Revenue (%)
n/a -27.9 -8.76 -6.96 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7
as % of Revenue (%)
n/a -6.34 0.54 2.85 4.79 4.79 4.79 4.79 4.87 4.80 4.79 4.79
Revenue (%)
32.0 9.51 20.9 7.65 3.45 4.45 5.45 6.45 7.45 8.45 9.45 9.45
2.34 5.76 63.5 25.9 20.9 15.9 10.9 5.95 2.95 2.95 2.95 2.95
Tax Rate (%) 0.00 28.4 0.59 -31.3 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 30.0
Total Expenses (Mil $) 0.00 0.00 226 60.3 30.1 24.7 21.7 19.9 18.3 16.8 17.5 17.7
Gross Profit (Mil $) 0.00 0.00 189 54.5 32.1 25.6 21.7 19.5 17.5 15.7 14.8 14.8
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 44
Detailed P&L for the CastleVille business

The most important drivers for the CastleVille business are discussed above, here is the detailed P&L.

CastleVille: Detailed P&L
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues
CastleVille Revenues (Mil $) 0.00 0.00 8.40 47.9 28.0 22.4 19.1 17.1 15.4 13.9 13.2 13.2
CastleVille's Average Monthly
Active Users (MAU)
0.00 n/a 2.50 15.0 9.75 7.80 6.63 5.97 5.37 4.83 4.59 4.59
CastleVille's Average Revenue Per
User (ARPU)
0.00 n/a 0.28 0.27 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
Total Revenues (Mil $) 0.00 0.00 8.40 47.9 28.0 22.4 19.1 17.1 15.4 13.9 13.2 13.2
Expenses
Revenues (%)
53.3 22.3 24.6 23.5 25.0 26.5 28.0 29.0 30.0 31.0 32.0 33.0
(%)
40.5 23.3 30.9 34.7 41.7 40.7 39.7 38.7 37.7 36.7 36.7 36.7
as % of Revenue (%)
n/a -27.9 -8.76 -6.96 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7
as % of Revenue (%)
n/a -6.34 0.54 2.85 4.79 4.79 4.79 4.79 4.87 4.80 4.79 4.79
Revenue (%)
32.0 9.51 20.9 7.65 3.45 4.45 5.45 6.45 7.45 8.45 9.45 9.45
2.34 5.76 63.5 25.9 20.9 15.9 10.9 5.95 2.95 2.95 2.95 2.95
Tax Rate (%) 0.00 28.4 0.59 -31.3 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 30.0
Total Expenses (Mil $) 0.00 0.00 7.31 38.9 19.4 16.0 14.0 12.9 11.8 10.9 11.3 11.4
Gross Profit (Mil $) 0.00 0.00 6.10 35.2 20.7 16.5 14.0 12.6 11.3 10.1 9.56 9.53
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 45
Detailed P&L for the Empires & Allies
business

The most important drivers for the Empires & Allies business are discussed above, here is the detailed P&L.

Empires & Allies: Detailed P&L
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues
Empires & Allies Revenues (Mil $) 0.00 0.00 62.2 23.6 4.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Empires & Allies Average
n/a n/a 18.5 7.40 1.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Empires & Allies Average
n/a n/a 0.28 0.27 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
Total Revenues (Mil $) 0.00 0.00 62.2 23.6 4.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Expenses
Revenues (%)
53.3 22.3 24.6 23.5 25.0 26.5 28.0 29.0 30.0 31.0 32.0 33.0
(%)
40.5 23.3 30.9 34.7 41.7 40.7 39.7 38.7 37.7 36.7 36.7 36.7
as % of Revenue (%)
n/a -27.9 -8.76 -6.96 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7 -15.7
as % of Revenue (%)
n/a -6.34 0.54 2.85 4.79 4.79 4.79 4.79 4.87 4.80 4.79 4.79
Revenue (%)
32.0 9.51 20.9 7.65 3.45 4.45 5.45 6.45 7.45 8.45 9.45 9.45
2.34 5.76 63.5 25.9 20.9 15.9 10.9 5.95 2.95 2.95 2.95 2.95
Tax Rate (%) 0.00 28.4 0.59 -31.3 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 -0.00 30.0
Total Expenses (Mil $) 0.00 0.00 54.1 19.2 2.95 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Gross Profit (Mil $) 0.00 0.00 45.1 17.4 3.15 0.00 0.00 0.00 0.00 0.00 0.00 0.00
TREFIS

ANALYSIS for ZYNGA

CONTENT@TREFIS.COM

+ 1 617 394 8763 46

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ANALYSIS for NASDAQ : ZNGA OCTOBER 28, 2013

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