ZYNGA INC (Form: 10-Q, Received: 05/06/2021 16:49:31)
false 2021 Q1 0001439404 --12-31 P5D P5D 2021-05-04 2021 P3Y 1.2 24.0 35.0 20.3 9.5 88.8 47.0 55.0 49.2 29.0 P6Y5M4D P6Y2M19D 0001439404 2021-01-01 2021-03-31 xbrli:shares 0001439404 2021-04-15 iso4217:USD 0001439404 2021-03-31 0001439404 2020-12-31 iso4217:USD xbrli:shares 0001439404 znga:OnlineGameMember 2021-01-01 2021-03-31 0001439404 znga:OnlineGameMember 2020-01-01 2020-03-31 0001439404 znga:AdvertisingAndOtherMember 2021-01-01 2021-03-31 0001439404 znga:AdvertisingAndOtherMember 2020-01-01 2020-03-31 0001439404 2020-01-01 2020-03-31 0001439404 us-gaap:CommonClassAMember 2020-12-31 0001439404 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001439404 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001439404 us-gaap:RetainedEarningsMember 2020-12-31 0001439404 us-gaap:CommonClassAMember 2021-01-01 2021-03-31 0001439404 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember us-gaap:CommonClassAMember 2021-01-01 2021-03-31 0001439404 us-gaap:TreasuryStockMember us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-03-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-03-31 0001439404 us-gaap:TreasuryStockMember 2021-01-01 2021-03-31 0001439404 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001439404 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001439404 us-gaap:CommonClassAMember 2021-03-31 0001439404 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001439404 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001439404 us-gaap:RetainedEarningsMember 2021-03-31 0001439404 us-gaap:CommonClassAMember 2019-12-31 0001439404 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001439404 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001439404 us-gaap:RetainedEarningsMember 2019-12-31 0001439404 2019-12-31 0001439404 us-gaap:CommonClassAMember 2020-01-01 2020-03-31 0001439404 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember us-gaap:CommonClassAMember 2020-01-01 2020-03-31 0001439404 us-gaap:TreasuryStockMember us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001439404 us-gaap:TreasuryStockMember 2020-01-01 2020-03-31 0001439404 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001439404 us-gaap:RetainedEarningsMember us-gaap:AccountingStandardsUpdate201613Member srt:RevisionOfPriorPeriodChangeInAccountingPrincipleAdjustmentMember 2020-01-01 2020-03-31 0001439404 us-gaap:AccountingStandardsUpdate201613Member srt:RevisionOfPriorPeriodChangeInAccountingPrincipleAdjustmentMember 2020-01-01 2020-03-31 0001439404 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001439404 us-gaap:CommonClassAMember 2020-03-31 0001439404 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001439404 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001439404 us-gaap:RetainedEarningsMember 2020-03-31 0001439404 2020-03-31 0001439404 znga:EchtraGamesIncMember 2021-01-01 2021-03-31 0001439404 znga:MobileOnlineGameMember 2021-01-01 2021-03-31 0001439404 znga:MobileOnlineGameMember 2020-01-01 2020-03-31 0001439404 znga:OtherOnlineGameMember 2021-01-01 2021-03-31 0001439404 znga:OtherOnlineGameMember 2020-01-01 2020-03-31 0001439404 znga:MobileAdvertisingAndOtherMember 2021-01-01 2021-03-31 0001439404 znga:MobileAdvertisingAndOtherMember 2020-01-01 2020-03-31 0001439404 znga:WebAdvertisingAndOtherMember 2021-01-01 2021-03-31 0001439404 znga:WebAdvertisingAndOtherMember 2020-01-01 2020-03-31 0001439404 country:US 2021-01-01 2021-03-31 0001439404 country:US 2020-01-01 2020-03-31 0001439404 znga:AllOtherCountriesMember 2021-01-01 2021-03-31 0001439404 znga:AllOtherCountriesMember 2020-01-01 2020-03-31 0001439404 znga:DurableVirtualItemsMember 2021-01-01 2021-03-31 0001439404 znga:DurableVirtualItemsMember 2019-01-01 2019-03-31 0001439404 srt:MinimumMember 2021-01-01 2021-03-31 0001439404 srt:MaximumMember 2021-01-01 2021-03-31 0001439404 2020-10-01 2020-12-31 0001439404 srt:MaximumMember 2021-04-01 2021-03-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2021-03-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeDepositsMember us-gaap:ShortTermInvestmentsMember 2021-03-31 0001439404 us-gaap:ShortTermInvestmentsMember 2021-03-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2020-12-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeDepositsMember us-gaap:ShortTermInvestmentsMember 2020-12-31 0001439404 us-gaap:ShortTermInvestmentsMember 2020-12-31 0001439404 us-gaap:CorporateDebtSecuritiesMember znga:LongTermInvestmentsMember 2020-12-31 0001439404 znga:LongTermInvestmentsMember 2020-12-31 0001439404 znga:NetIncomeLossMember 2021-01-01 2021-03-31 0001439404 znga:NetIncomeLossMember 2020-01-01 2020-03-31 0001439404 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:MoneyMarketFundsMember us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember znga:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:CorporateDebtSecuritiesMember znga:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member us-gaap:MutualFundMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:MutualFundMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel3Member znga:ContingentConsiderationMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 znga:ContingentConsiderationMember us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-03-31 0001439404 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:MoneyMarketFundsMember us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:FairValueInputsLevel2Member us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:FairValueInputsLevel2Member us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 znga:ForeignCertificatesOfDepositAndTimeMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:MutualFundMember us-gaap:FairValueInputsLevel2Member us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:MutualFundMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member znga:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:CorporateDebtSecuritiesMember znga:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember znga:ContingentConsiderationMember 2020-12-31 0001439404 us-gaap:FairValueMeasurementsRecurringMember znga:ContingentConsiderationMember 2020-12-31 0001439404 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001439404 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-01-01 2021-03-31 0001439404 znga:GramGamesMember 2021-01-01 2021-03-31 0001439404 znga:GramGamesMember srt:ScenarioForecastMember 2021-09-30 xbrli:pure 0001439404 znga:GramGamesMember us-gaap:MeasurementInputDiscountRateMember 2021-03-31 0001439404 znga:GramGamesMember 2021-03-31 0001439404 znga:GramGamesMember 2020-12-31 0001439404 znga:GramGamesMember us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0001439404 znga:GramGamesMember us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-03-31 0001439404 srt:MinimumMember znga:MeasurementInputBookingsGrowthRatesMember 2021-03-31 0001439404 srt:MaximumMember znga:MeasurementInputBookingsGrowthRatesMember 2021-03-31 0001439404 srt:WeightedAverageMember znga:MeasurementInputBookingsGrowthRatesMember 2021-03-31 0001439404 srt:MinimumMember znga:MeasurementInputBookingsVolatilityMember 2021-03-31 0001439404 srt:MaximumMember znga:MeasurementInputBookingsVolatilityMember 2021-03-31 0001439404 srt:WeightedAverageMember znga:MeasurementInputBookingsVolatilityMember 2021-03-31 0001439404 srt:MinimumMember znga:MeasurementInputAssetVolatilityMember 2021-03-31 0001439404 srt:MaximumMember znga:MeasurementInputAssetVolatilityMember 2021-03-31 0001439404 srt:WeightedAverageMember znga:MeasurementInputAssetVolatilityMember 2021-03-31 0001439404 srt:MinimumMember znga:MeasurementInputNetCashFlowsMarginMember 2021-03-31 0001439404 srt:MaximumMember znga:MeasurementInputNetCashFlowsMarginMember 2021-03-31 0001439404 srt:WeightedAverageMember znga:MeasurementInputNetCashFlowsMarginMember 2021-03-31 0001439404 srt:MinimumMember us-gaap:MeasurementInputDiscountRateMember 2021-03-31 0001439404 srt:MaximumMember us-gaap:MeasurementInputDiscountRateMember 2021-03-31 0001439404 srt:WeightedAverageMember us-gaap:MeasurementInputDiscountRateMember 2021-03-31 0001439404 znga:SmallGiantMember 2021-03-31 0001439404 znga:SmallGiantMember 2020-12-31 0001439404 znga:SmallGiantMember us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0001439404 znga:SmallGiantMember us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-03-31 0001439404 znga:SmallGiantMember 2021-01-01 2021-03-31 0001439404 znga:RollicMember 2021-03-31 0001439404 znga:RollicMember 2020-12-31 0001439404 znga:RollicMember us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0001439404 us-gaap:ComputerEquipmentMember 2021-03-31 0001439404 us-gaap:ComputerEquipmentMember 2020-12-31 0001439404 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2021-03-31 0001439404 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2020-12-31 0001439404 us-gaap:FurnitureAndFixturesMember 2021-03-31 0001439404 us-gaap:FurnitureAndFixturesMember 2020-12-31 0001439404 us-gaap:LeaseholdsAndLeaseholdImprovementsMember 2021-03-31 0001439404 us-gaap:LeaseholdsAndLeaseholdImprovementsMember 2020-12-31 0001439404 country:US 2021-03-31 0001439404 country:US 2020-12-31 0001439404 country:TR 2021-03-31 0001439404 country:TR 2020-12-31 0001439404 country:IN 2021-03-31 0001439404 country:IN 2020-12-31 0001439404 us-gaap:NonUsMember 2021-03-31 0001439404 us-gaap:NonUsMember 2020-12-31 0001439404 znga:EchtraGamesIncMember 2021-03-02 2021-03-02 0001439404 znga:EchtraGamesIncMember 2021-03-02 0001439404 znga:DevelopedTechnologyRightsUsefulLifeOfTenYearsMember znga:EchtraGamesIncMember 2021-03-02 0001439404 znga:EchtraGamesIncMember znga:DevelopedTechnologyRightsUsefulLifeOfTenYearsMember 2021-03-02 2021-03-02 0001439404 us-gaap:DevelopedTechnologyRightsMember 2021-03-31 0001439404 us-gaap:TrademarksMember 2021-03-31 0001439404 znga:ThirdPartyDeveloperRelationshipsMember 2021-03-31 0001439404 us-gaap:DevelopedTechnologyRightsMember 2020-12-31 0001439404 us-gaap:TrademarksMember 2020-12-31 0001439404 znga:ThirdPartyDeveloperRelationshipsMember 2020-12-31 0001439404 us-gaap:OtherIntangibleAssetsMember 2021-01-01 2021-03-31 0001439404 us-gaap:OtherIntangibleAssetsMember 2020-01-01 2020-03-31 0001439404 us-gaap:DevelopedTechnologyRightsMember 2021-01-01 2021-03-31 0001439404 us-gaap:TrademarksMember 2021-01-01 2021-03-31 0001439404 znga:ThirdPartyDeveloperRelationshipsMember 2021-01-01 2021-03-31 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2020-12-17 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2020-12-17 2020-12-17 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2019-06-14 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2019-06-13 2019-06-14 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2021-01-01 2021-03-31 0001439404 us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2019-06-13 2019-06-14 0001439404 us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2020-12-17 2020-12-17 0001439404 us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2019-06-14 0001439404 us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2020-12-17 utr:D 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2021-03-31 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2021-03-31 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2020-12-31 0001439404 znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2020-12-31 0001439404 us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2021-01-01 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2021-03-31 0001439404 us-gaap:FairValueInputsLevel2Member znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2021-03-31 0001439404 znga:CappedCallTransactionsMember znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2021-03-31 0001439404 znga:CappedCallTransactionsMember znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2021-03-31 0001439404 znga:CappedCallTransactionsMember us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2021-01-01 2021-03-31 0001439404 znga:CappedCallTransactionsMember us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2021-01-01 2021-03-31 0001439404 znga:CappedCallTransactionsMember znga:ConvertibleSeniorNotesDueTwoZeroTwoFourMember 2021-01-01 2021-03-31 0001439404 znga:CappedCallTransactionsMember znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2021-01-01 2021-03-31 0001439404 us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesAndCappedCallTransactionsMember 2021-01-01 2021-03-31 0001439404 us-gaap:CommonClassAMember znga:ConvertibleSeniorNotesDueTwoZeroTwoSixMember 2021-01-01 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember 2021-01-01 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MinimumMember 2021-01-01 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MaximumMember 2021-01-01 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MinimumMember 2020-10-01 2020-12-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MaximumMember 2020-10-01 2020-12-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MinimumMember 2020-07-01 2020-09-30 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MaximumMember 2020-07-01 2020-09-30 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MinimumMember 2020-04-01 2020-06-30 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:BaseRateMember srt:MaximumMember 2020-04-01 2020-06-30 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember srt:MinimumMember 2020-07-01 2020-12-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember srt:MaximumMember 2020-07-01 2020-12-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:FederalFundsEffectiveSwapRateMember 2021-01-01 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember srt:MinimumMember 2021-01-01 2021-03-31 0001439404 znga:BankOfAmericaNAMember us-gaap:RevolvingCreditFacilityMember srt:MaximumMember 2021-01-01 2021-03-31 0001439404 us-gaap:CostOfSalesMember 2021-01-01 2021-03-31 0001439404 us-gaap:CostOfSalesMember 2020-01-01 2020-03-31 0001439404 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-03-31 0001439404 us-gaap:ResearchAndDevelopmentExpenseMember 2020-01-01 2020-03-31 0001439404 us-gaap:SellingAndMarketingExpenseMember 2021-01-01 2021-03-31 0001439404 us-gaap:SellingAndMarketingExpenseMember 2020-01-01 2020-03-31 0001439404 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-03-31 0001439404 us-gaap:GeneralAndAdministrativeExpenseMember 2020-01-01 2020-03-31 0001439404 us-gaap:EmployeeStockOptionMember 2020-12-31 0001439404 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-03-31 0001439404 us-gaap:EmployeeStockOptionMember 2021-03-31 0001439404 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-12-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember 2020-12-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember 2021-03-31 0001439404 znga:PerformanceRSUsMember 2020-03-15 2020-03-15 0001439404 znga:PerformanceRSUsMember srt:MinimumMember 2020-03-15 2020-03-15 0001439404 znga:PerformanceRSUsMember srt:MaximumMember 2020-03-15 2020-03-15 0001439404 znga:PerformanceRSUsMember 2020-03-15 0001439404 us-gaap:CommonClassAMember znga:TwoThousandAndEighteenShareRepurchaseProgramMember srt:MaximumMember 2018-04-30 0001439404 znga:TwoThousandAndEighteenShareRepurchaseProgramMember 2021-01-01 2021-03-31 0001439404 znga:TwoThousandAndElevenEquityIncentivePlanMember 2021-03-31 0001439404 znga:TwentyElevenEmployeeStockPurchasePlanMember 2021-03-31 0001439404 us-gaap:AccumulatedTranslationAdjustmentMember 2020-12-31 0001439404 znga:OtherComprehensiveIncomeLossAvailableForSaleSecuritiesAdjustmentNetOfTaxMember 2020-12-31 0001439404 us-gaap:AccumulatedTranslationAdjustmentMember 2021-01-01 2021-03-31 0001439404 znga:OtherComprehensiveIncomeLossAvailableForSaleSecuritiesAdjustmentNetOfTaxMember 2021-01-01 2021-03-31 0001439404 us-gaap:AccumulatedTranslationAdjustmentMember 2021-03-31 0001439404 znga:StockOptionsAndEmployeeStockPurchasePlanMember 2021-01-01 2021-03-31 0001439404 znga:StockOptionsAndEmployeeStockPurchasePlanMember 2020-01-01 2020-03-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-03-31 0001439404 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-03-31 0001439404 znga:ConvertibleSeniorNotesMember 2021-01-01 2021-03-31 0001439404 znga:UncosoftYazlmAnonimSirketiMember us-gaap:SubsequentEventMember znga:RollicMember 2021-04-21 2021-04-21 0001439404 znga:ChartboostIncMember us-gaap:SubsequentEventMember 2021-05-04 2021-05-04 0001439404 znga:UncosoftYazlmAnonimSirketiMember us-gaap:SubsequentEventMember znga:RollicMember 2021-04-21

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                   

Commission File Number: 001-35375

 

Zynga Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

42-1733483

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

699 Eighth Street

 

San Francisco, CA

94103

(Address of principal executive offices)

(Zip Code)

 

(855) 449-9642

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock

ZNGA

Nasdaq Global Select Market

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes      No  

As of April 15, 2021, there were 1,088,762,805 shares of the Registrant’s Class A common stock outstanding.

 

 

 

 


 

Zynga Inc.

Form 10-Q Quarterly Report

TABLE OF CONTENTS

 

 

 

 

 

Page

Cautionary Note Regarding Forward-Looking Statements

 

1

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

2

 

 

 

 

 

 

 

Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

 

2

 

 

 

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020

 

3

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020

 

4

 

 

 

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020

 

5

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020

 

6

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 

7

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

 

37

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

37

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

38

 

 

 

 

 

 

Item 1A.

Risk Factors

 

38

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Issuer Purchases of Equity Purchases

 

60

 

 

 

 

 

 

Item 6.

Exhibits

 

61

 

 

 

 

 

 

 

Signatures

 

62

 

Zynga, the Zynga logo and other trademarks or service marks of Zynga appearing in this report are the property of Zynga Inc. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective holders.

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward looking statements reflecting our current expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements related to industry prospects, our future economic performance including anticipated revenues and expenditures, results of operations or financial position, and other financial items, our business plans and objectives, including our growth strategies and intended product releases, the impact of the ongoing coronavirus (COVID-19) pandemic and our response to it, our ability to integrate and achieve the intended benefits of our recent and announced acquisitions, and may include certain assumptions that underlie the forward-looking statements. Forward-looking statements often include words such as “outlook,” “projected,” “intends,” “will,” “anticipate,” “believe,” “target,” “expect,” and statements in the future tense are generally forward-looking.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. The achievement or success of the matters covered by such forward-looking statements involves significant risks, uncertainties and assumptions, including those described in “Part II. Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and industry. New risks may also emerge from time to time. It is not possible for our management to predict all of the risks related to our business and operations, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated, predicted or implied in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur, and reported results should not be considered as an indication of future performance. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Except as required by law, we undertake no obligation to update any forward-looking statements for any reason to conform these statements to actual results or to changes in our expectations.

 

 

 

1


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Zynga Inc.

Consolidated Balance Sheets

(In millions, except par value)

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

699.5

 

 

$

1,364.4

 

Short-term investments

 

 

662.3

 

 

 

208.4

 

Accounts receivable, net of allowance of $0.5 at March 31, 2021

   and December 31, 2020, respectively

 

 

274.6

 

 

 

217.5

 

Restricted cash

 

 

120.0

 

 

 

 

Prepaid expenses

 

 

52.8

 

 

 

40.0

 

Other current assets

 

 

23.6

 

 

 

29.5

 

Total current assets

 

 

1,832.8

 

 

 

1,859.8

 

Long-term investments

 

 

 

 

 

2.0

 

Goodwill

 

 

3,164.3

 

 

 

3,160.8

 

Intangible assets, net

 

 

793.1

 

 

 

838.1

 

Property and equipment, net

 

 

37.6

 

 

 

39.3

 

Right-of-use assets

 

 

128.5

 

 

 

131.9

 

Restricted cash

 

 

16.0

 

 

 

136.0

 

Prepaid expenses

 

 

14.5

 

 

 

21.6

 

Other non-current assets

 

 

19.6

 

 

 

17.0

 

Total assets

 

$

6,006.4

 

 

$

6,206.5

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

37.3

 

 

$

57.2

 

Income tax payable

 

 

43.4

 

 

 

39.6

 

Deferred revenue

 

 

778.4

 

 

 

747.7

 

Operating lease liabilities

 

 

18.1

 

 

 

18.5

 

Other current liabilities

 

 

547.0

 

 

 

462.4

 

Total current liabilities

 

 

1,424.2

 

 

 

1,325.4

 

Convertible senior notes, net

 

 

1,303.2

 

 

 

1,289.9

 

Deferred revenue

 

 

1.8

 

 

 

0.3

 

Deferred tax liabilities, net

 

 

109.9

 

 

 

126.3

 

Non-current operating lease liabilities

 

 

118.4

 

 

 

122.0

 

Other non-current liabilities

 

 

106.5

 

 

 

401.1

 

Total liabilities

 

 

3,064.0

 

 

 

3,265.0

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.00000625 par value and additional paid in capital -

      authorized shares: 2,020.5 shares outstanding: 1,088.8 shares as

      of March 31, 2021 and 1,081.6 as of December 31, 2020

 

 

5,324.2

 

 

 

5,276.5

 

Accumulated other comprehensive income (loss)

 

 

(66.3

)

 

 

(50.7

)

Accumulated deficit

 

 

(2,315.5

)

 

 

(2,284.3

)

Total stockholders’ equity

 

 

2,942.4

 

 

 

2,941.5

 

Total liabilities and stockholders’ equity

 

$

6,006.4

 

 

$

6,206.5

 

 

See accompanying notes to consolidated financial statements.

2


Zynga Inc.

Consolidated Statements of Operations

(In millions, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Online game

 

$

557.0

 

 

$

344.4

 

Advertising and other

 

 

123.3

 

 

 

59.4

 

Total revenue

 

 

680.3

 

 

 

403.8

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of revenue

 

 

260.7

 

 

 

146.2

 

Research and development

 

 

140.7

 

 

 

197.8

 

Sales and marketing

 

 

248.7

 

 

 

123.2

 

General and administrative

 

 

35.7

 

 

 

28.2

 

Total costs and expenses

 

 

685.8

 

 

 

495.4

 

Income (loss) from operations

 

 

(5.5

)

 

 

(91.6

)

Interest income

 

 

1.7

 

 

 

5.5

 

Interest expense

 

 

(14.7

)

 

 

(7.0

)

Other income (expense), net

 

 

8.9

 

 

 

(2.3

)

Income (loss) before income taxes

 

 

(9.6

)

 

 

(95.4

)

Provision for (benefit from) income taxes

 

 

13.4

 

 

 

8.5

 

Net income (loss)

 

$

(23.0

)

 

$

(103.9

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common

   stockholders:

 

 

 

 

 

 

 

 

Basic

 

$

(0.02

)

 

$

(0.11

)

Diluted

 

$

(0.02

)

 

$

(0.11

)

 

 

 

 

 

 

 

 

 

Weighted-average common shares used to compute net income

   (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic

 

 

1,084.4

 

 

 

952.5

 

Diluted

 

 

1,084.4

 

 

 

952.5

 

 

See accompanying notes to consolidated financial statements.


3


 

Zynga Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Net income (loss)

 

$

(23.0

)

 

$

(103.9

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Change in foreign currency translation adjustment

 

 

(15.5

)

 

 

(29.0

)

Net change in unrealized gains (losses) on available-for-sale

   marketable debt securities, net of tax

 

 

(0.1

)

 

 

(1.0

)

Other comprehensive income (loss), net of tax

 

 

(15.6

)

 

 

(30.0

)

Comprehensive income (loss)

 

$

(38.6

)

 

$

(133.9

)

 

See accompanying notes to consolidated financial statements.


4


 

Zynga Inc.

Consolidated Statements of Stockholders’ Equity

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Class A

Common Stock

 

 

Additional

Paid-In

 

 

Treasury

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

1,081.6

 

 

$

 

 

$

5,276.5

 

 

$

 

 

$

(50.7

)

 

$

(2,284.3

)

 

$

2,941.5

 

Exercise of stock options and ESPP

 

 

2.7

 

 

 

 

 

 

10.5

 

 

 

 

 

 

 

 

 

 

 

 

10.5

 

Vesting of RSUs, net of tax

   withholdings

 

 

4.5

 

 

 

 

 

 

 

 

 

(8.2

)

 

 

 

 

 

 

 

 

(8.2

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

37.2

 

 

 

 

 

 

 

 

 

 

 

 

37.2

 

Retirements of treasury stock

 

 

 

 

 

 

 

 

 

 

 

8.2

 

 

 

 

 

 

(8.2

)

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23.0

)

 

 

(23.0

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15.6

)

 

 

 

 

 

(15.6

)

Balances at March 31, 2021

 

 

1,088.8

 

 

$

 

 

$

5,324.2

 

 

$

 

 

$

(66.3

)

 

$

(2,315.5

)

 

$

2,942.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Class A

Common Stock

 

 

Additional

Paid-In

 

 

Treasury

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2019

 

 

950.0

 

 

$

 

 

$

3,898.7

 

 

$

 

 

$

(125.9

)

 

$

(1,797.4

)

 

$

1,975.4

 

Exercise of stock options and ESPP

 

 

2.5

 

 

 

 

 

 

8.8

 

 

 

 

 

 

 

 

 

 

 

 

8.8

 

Vesting of RSUs, net of tax

   withholdings

 

 

3.3

 

 

 

 

 

 

 

 

 

(14.8

)

 

 

 

 

 

 

 

 

(14.8

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

20.5

 

 

 

 

 

 

 

 

 

 

 

 

20.5

 

Retirements of treasury stock

 

 

 

 

 

 

 

 

 

 

 

14.8

 

 

 

 

 

 

(14.8

)

 

 

 

Adoption of ASU 2016-13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.4

)

 

 

(0.4

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(103.9

)

 

 

(103.9

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30.0

)

 

 

 

 

 

(30.0

)

Balances at March 31, 2020

 

 

955.8

 

 

$

 

 

$

3,928.0

 

 

$

 

 

$

(155.9

)

 

$

(1,916.5

)

 

$

1,855.6

 

 

See accompanying notes to consolidated financial statements.

5


Zynga Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(23.0

)

 

$

(103.9

)

Adjustments to reconcile net income (loss) to net cash provided by (used in)

   operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

56.5

 

 

 

18.9

 

Stock-based compensation expense

 

 

37.2

 

 

 

20.5

 

(Gain) loss from sale of investments, foreign currency and sale of assets, net

 

 

(9.0

)

 

 

0.9

 

(Accretion) amortization on marketable debt securities, net

 

 

 

 

 

(1.9

)

Noncash lease expense

 

 

4.2

 

 

 

4.2

 

Noncash interest expense

 

 

13.2

 

 

 

6.2

 

Change in deferred income taxes and other

 

 

(15.2

)

 

 

5.4

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(59.5

)

 

 

(27.3

)

Prepaid expenses and other assets

 

 

(2.0

)

 

 

1.4

 

Accounts payable

 

 

(18.8

)

 

 

(9.0

)

Deferred revenue

 

 

40.4

 

 

 

20.7

 

Income tax payable

 

 

5.9

 

 

 

2.5

 

Operating lease and other liabilities

 

 

(193.6

)

 

 

26.2

 

Net cash provided by (used in) operating activities

 

 

(163.7

)

 

 

(35.2

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(537.2

)

 

 

(471.0

)

Maturities of investments

 

 

83.9

 

 

 

605.4

 

Sales of investments

 

 

 

 

 

96.8

 

Acquisition of property and equipment

 

 

(1.7

)

 

 

(8.5

)

Business combinations, net of cash acquired

 

 

(19.6

)

 

 

 

Asset acquisitions of intangible assets

 

 

(0.9

)

 

 

 

Other investing activities, net

 

 

(0.3

)

 

 

(1.0

)

Net cash provided by (used in) investing activities

 

 

(475.8

)

 

 

221.7

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Debt issuance costs paid

 

 

(0.9

)

 

 

 

Taxes paid related to net share settlement of stockholders' equity awards

 

 

(8.2

)

 

 

(14.8

)

Proceeds from issuance of common stock

 

 

10.5

 

 

 

8.8

 

Acquisition-related contingent consideration payments

 

 

(25.1

)

 

 

(48.1

)

Net cash provided by (used in) financing activities

 

 

(23.7

)

 

 

(54.1

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(1.7

)

 

 

(3.3

)

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

 

(664.9

)

 

 

129.1

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

1,500.4

 

 

 

453.3

 

Cash, cash equivalents and restricted cash, end of period

 

$

835.5

 

 

$

582.4

 

 

 

 

 

 

 

 

 

 

Noncash investing activity:

 

 

 

 

 

 

 

 

Acquisition-related deferred purchase consideration

 

$

1.5

 

 

$

 

 

 

See accompanying notes to consolidated financial statements.

 

6


 

Zynga Inc.

Notes to Consolidated Financial Statements

(Unaudited)

 

1. Overview and Summary of Significant Accounting Policies

Organization and Description of Business

Zynga Inc. (“Zynga,” “we” or the “Company”) is a leading provider of social game services. We develop, market and operate social games as live services played on mobile platforms (such as Apple’s iOS and Google’s Android), social networking platforms (such as Facebook and Snapchat), Personal Computers (PCs), consoles (such as Nintendo’s Switch) and other platforms. Generally, all of our games are free to play, and we generate substantially all of our revenue through the sale of in-game virtual items and advertising services. Our operations are headquartered in San Francisco, California, and we have several operating locations in the U.S. as well as various international office locations in North America, Asia and Europe.

We completed our initial public offering in December 2011 and our Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ZNGA.”

Basis of Presentation and Consolidation

The accompanying interim consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The interim consolidated financial statements include the operations of the Company and its owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation.

The accompanying interim consolidated financial statements and these related notes should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Unaudited Interim Financial Information

The accompanying interim consolidated balance sheets as of March 31, 2021, the interim consolidated statements of operations, statements of comprehensive income (loss), statements of stockholders’ equity and statements of cash flows for the three months ended March 31, 2021 and 2020 and the notes to the interim consolidated financial statements are unaudited. In management’s opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s statement of financial position and operating results for the periods presented. The results for the three months ended March 31, 2021 are not necessarily indicative of the results expected for the full fiscal year or any other future period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the interim consolidated financial statements and notes thereto. Significant estimates and assumptions reflected in the financial statements include, but are not limited to, the estimated average playing period of payers that we use for revenue recognition, useful lives of property and equipment and intangible assets, accrued liabilities, income taxes, the fair value of assets and liabilities acquired through business combinations, contingent consideration obligations, the discount rate used in measuring our operating lease liabilities, the interest rate used in calculating the present value of the initial liability component of our convertible senior notes, stock-based compensation expense and evaluation of recoverability of goodwill, intangible assets and long-lived assets. Actual results could differ materially from those estimates. 

Recent Accounting Pronouncements

Issued But Not Yet Adopted

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-08, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”, which simplifies the accounting for convertible instruments by reducing the number of accounting models and requiring that a convertible instrument be accounted for as a single liability measured at amortized cost. Further, the ASU amends the earnings per share guidance by requiring the diluted earnings per share calculation for convertible instruments to follow the if-converted method, with use of the treasury stock method no longer permitted. The ASU is effective for fiscal years beginning after December 15, 2021, with early adoption permitted, but no earlier than fiscal years beginning after December 15, 2020. The ASU allows either a modified retrospective method of transition or a fully retrospective method of transition, with any adjustments recognized as an adjustment to the opening balance of retained earnings. The Company is currently assessing this standard’s impact on its consolidated financial statements, but does anticipate a material adjustment to the carrying amount of the liability and equity components of our convertible senior notes upon adoption and the Company will not early adopt.

7


2. Revenue from Contracts with Customers

Disaggregation of Revenue

The following table presents our revenue disaggregated by platform (in millions):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Online game:

 

 

 

 

 

 

 

 

Mobile

 

$

538.7

 

 

$

328.7

 

Other(1)

 

 

18.3

 

 

 

15.7

 

Online game total

 

$

557.0

 

 

$

344.4

 

Advertising and other:

 

 

 

 

 

 

 

 

Mobile

 

$

122.1

 

 

$

58.3

 

Other(1)

 

 

1.2

 

 

 

1.1

 

Advertising and other total

 

$

123.3

 

 

$

59.4

 

Total revenue

 

$

680.3

 

 

$

403.8

 

 

 

(1)

Includes web revenue for online game and web advertising revenue and other revenue for advertising and other

 

The following table presents our revenue disaggregated based on the geographic location of our payers (in millions):

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

United States

 

$

412.0

 

 

$

243.3

 

All other countries(1)

 

 

268.3

 

 

 

160.5

 

Total revenue

 

$

680.3

 

 

$

403.8

 

 

 

(1)

No foreign country exceeded 10% of our total revenue for any periods presented.

The estimated weighted average playing period of payers was ten months for the three months ended March 31, 2021 and 2020.

During the three months ended March 31, 2021, we recognized $1.9 million of online game revenue and income from operations from changes in our estimated average playing period of payers that required adjusting the recognition period of deferred revenue generated in prior periods. These changes in estimates did not impact our reported earnings per share in the three months ended March 31, 2021. During the three months ended March 31, 2020, there was no significant impact from changes in our estimated average playing period of payers that required adjusting the recognition period of deferred revenue generated in prior periods.

Contract Balances

We receive payments from our customers based on the payment terms established in our contracts. Payments for online game revenue are required at time of purchase, are non-refundable and relate to non-cancellable contracts that specify our performance obligations. Such payments are initially recorded to deferred revenue and are recognized into revenue as we satisfy our performance obligations. Further, payments made by our players are collected by payment processors and remitted to us generally within 45 days of invoicing. Our right to the payments collected on our behalf is unconditional and therefore recorded as accounts receivable, net of the associated payment processing fees.

Payments for advertising arrangements are due based on the contractually stated payment terms. The contract terms generally require payment within 30 to 60 days subsequent to the end of the month. Our right to payment from the customer is unconditional and therefore recorded as accounts receivable.  

During the three months ended March 31, 2021, we recognized $389.3 million of revenue that was included in the current deferred revenue balance on December 31, 2020.

The increase in accounts receivable, net during the three months ended March 31, 2021 was primarily driven by sales on account during the period exceeding cash collections of current period and previously due amounts. The increase in deferred revenue during the three months ended March 31, 2021 was primarily driven by the sale of virtual items during the period, exceeding revenue recognized from the satisfaction of our performance obligations.

8


Unsatisfied Performance Obligations

Substantially all of our unsatisfied performance obligations relate to contracts with an original expected length of one year or less.

 

3. Marketable Securities

Debt Securities

The following tables summarize the amortized cost, gross unrealized gains and losses and fair value of our short-term and long-term debt securities as of March 31, 2021 and December 31, 2020 (in millions):

 

 

 

March 31, 2021

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Aggregate

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Short-term debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

610.4

 

 

$

 

 

$

 

 

$

610.4

 

Foreign certificates of deposit and time

   deposits

 

 

4.3

 

 

 

 

 

 

 

 

 

4.3

 

Total

 

$

614.7

 

 

$

 

 

$

 

 

$

614.7

 

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Aggregate

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Short-term debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

152.7

 

 

$

0.1

 

 

$

 

 

$

152.8

 

Foreign certificates of deposit and time

   deposits

 

 

6.5

 

 

 

 

 

 

 

 

 

6.5

 

Total

 

$

159.2

 

 

$

0.1

 

 

$

 

 

$

159.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

$

2.0

 

 

$

 

 

$

 

 

$

2.0

 

Total

 

$

2.0

 

 

$

 

 

$

 

 

$

2.0

 

Equity Securities

We recognized a gain of $0.2 million and a loss of $0.9 million during the three months ended March 31, 2021 and 2020, respectively, as a component of other income (expense), net in our consolidated statement of operations associated with our mutual fund equity investments.

 

9


 

4. Fair Value Measurements

The composition of our financial assets and liabilities as of March 31, 2021 and December 31, 2020 among the three levels of the fair value hierarchy are as follows (in millions):

 

 

 

March 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

243.7

 

 

$

 

 

$

 

 

$

243.7

 

Corporate debt securities

 

 

 

 

 

25.0

 

 

 

 

 

 

25.0

 

Foreign certificates of deposit and time deposits

 

 

 

 

 

126.8

 

 

 

 

 

 

126.8

 

Short-term investments: