Social Gaming Firm Zynga Files for $1 Billion IPO

9:32 AM PST 07/01/2011 by Georg Szalai

The company, which in a regulatory filing reported a $90.6 million profit for 2010 and discussed its reliance on Facebook, is believed to look for a market valuation of $15 billion-$20 billion.


NEW YORK - Social gaming giant Zynga, the maker of such Facebook games as FarmVille and CityVille, on Friday filed for an IPO that is looking to raise as much as $1 billion.

According to a registration filing with the Securities and Exchange Commission, the San Francisco-based company will decide the number of shares to be sold and their price later. Reports have said Zynga is shooting for a market valuation of $15 billion-$20 billion.

That is more than the current market values of video game giants Activision Blizzard and Electronic Arts. The former's market capitalization stood at $13.5 billion as of mid-day Friday, and EA's stood at $8 billion, according to Bloomberg data. Yahoo's market value was $20.1 billion at that time.

The IPO filing listed Zynga's financials, including a profit of $90.6 million for 2010, compared to a $52.8 million loss in 2009.
The company also mentioned 2010 revenue of $597.5 million in the filing, up from $121.5 million in 2009. First-quarter revenue of $235.4 million compared with $100.9 million in the year-ago period.

Zynga's daily active users amounted to 62 million in the first quarter, down from 67 million in the year-ago period, but higher than the 48 million recorded in the fourth quarter of 2010. Overall, it has more than 232 million monthly active users.

Friday's IPO filing also made reference to Zynga's reliance on social networking giant Facebook. "We generate substantially all of our revenue and players through the Facebook platform and expect to continue to do so for the foreseeable future," it said in a section about factors affecting the company's business performance. "Facebook and other platforms have broad discretion to change their platforms, terms of service and other policies with respect to us or other developers, and those changes may be unfavorable to us."

Zynga CEO Mark Pincus and chief business officer Owen Van Natta are scheduled to attend Herb Allen's annual gathering of media, entertainment and tech moguls in Sun Valley next week, which is expected to feature some debate about this year's wave of Internet IPOs.
 
Zynga has been a key partner for Hollywood studios, which have run integrations with the company for upcoming film and DVD releases.

The company has also been doing integration deals in the TV and music spaces. For example, Lady Gaga did a broad-based promotion with Zynga for the recent launch of her new album.

Zynga investors include Kleiner Perkins Caufield & Byers, Avalon Ventures, Foundry Group, Softbank and Andreessen Horowitz, as well as private investors, such as former MTV and AOL top executive Bob Pittman, who is now chairman of media and entertainment platforms at radio giant Clear Channel, and LinkedIn chairman Reid Hoffman.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai








 

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