Zynga Announces Preliminary Financial Results for the Third Quarter and Lowers Outlook for Full Year 2012

Zynga Announces Preliminary Financial Results for the Third Quarter and Lowers
Outlook for Full Year 2012

SAN FRANCISCO, Oct. 4, 2012 (GLOBE NEWSWIRE) -- Zynga Inc. (Nasdaq:ZNGA), the
world's leading provider of social game services, today announced certain
preliminary financial results for its third quarter ended September 30, 2012.

Zynga expects to report revenue in the range of $300 million to $305 million
and bookings in the range of $250 million to $255 million for the third
quarter ended September 30, 2012. Zynga expects to report a net loss of
between $90 million and $105 million, non-GAAP net loss between $2 million and
$5 million and adjusted EBITDA between $10 million and $15 million for the
third quarter.In addition, Zynga expects to report diluted EPS between
($0.12) and ($0.14) and non-GAAP EPS between $0.00 and ($0.01) for the third
quarter. Preliminary third quarter results primarily reflect weakness of
certain games in our web "invest and express" category, and include an
estimated impairment charge between $85 million and $95 million (excluding any
income tax impact) related to the intangible assets previously acquired in
connection with the company's purchase of OMGPOP.

Zynga is also lowering its outlook for full year 2012 to reflect preliminary
third quarter results and revised expectations for the remainder of 2012. The
change in outlook is primarily due to reduced expectations for certain web
games including The Ville, and delays in launching several new games.

The company's updated outlook for full year 2012 includes:

  *Bookings projected to be in the range of$1.085 billion to $1.100 billion
    (compared to previous expectations of between $1.150 billion to $1.225
    billion).
    
  *Adjusted EBITDA projected to be in the range of$147 million to $162
    million (compared to previous expectations of between $180 million to $250
    million).

"The third quarter of 2012 continued to be challenging and, while many of our
games performed to plan, as a whole we did not execute to our satisfaction,"
said Mark Pincus, CEO and Founder, Zynga."We're addressing these near-term
challenges by implementing targeted cost reductions in the fourth quarter and
rationalizing our product R&D pipeline to reflect our strategic priorities.At
the same time, we are continuing to invest in our mobile business where we
have one of the strongest positions in the industry.These actions support our
strategy to transition from being a first party web game developer to a
multiplatform game network. We remain optimistic about the opportunity for
social gaming and the power of our player network of 311 million monthly
active users. When we offer our players highly engaging content, they respond.
FarmVille2 has been our most successful launch since CastleVille in terms of
daily bookings, and we now offer 3 of the top 5 most popular mobile games in
the U.S. in terms of time spent according to Nielsen."

Additional details regarding expense reductions and expectations for certain
other 2012 financial outlook results, including stock-based expense and
non-GAAP EPS, will be updated when the company reports full third quarter
financial results on October 24, 2012.

Zynga will issue a press release with full financial results for the third
quarter and additional details regarding its updated 2012 outlook on
Wednesday, October 24, 2012. The company will also host a conference call at
2:00 pm Pacific Time (5:00 pm Eastern Time) on October 24, 2012 to discuss
third quarter financial results and the company's strategy for the remainder
of the year.A live webcast of the conference call and supplemental slides
will be accessible from the Investor Relations page of our website
athttp://investor.zynga.com and a replay will be archived and accessible at
the same website after the call.

A discussion of non-GAAP financial measures and reconciliations of third
quarter non-GAAP financial measures to the most directly comparable GAAP
measures are provided below in this press release.Non-GAAP financial measures
are not intended to be considered in isolation or as a substitute for the
financial information prepared in accordance with generally accepted
accounting principles ("GAAP").

About Zynga Inc.

Zynga Inc. is the world's leading provider of social game services, which
include Zynga Poker, Words With Friends, Scramble With Friends, Gems with
Friends, Draw Something, FarmVille2, ChefVille, CityVille, Bubble Safari and
Ruby Blast. For the quarter ended September, 30, 2012, Zynga had approximately
311 million monthly active users playing its games. Zynga's games are
available on a number of global platforms, including Facebook, Zynga.com,
Google+, Tencent, Apple iOS and Google Android. Zynga is headquartered in San
Francisco, Calif.

The Zynga Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11743

Forward-Looking Statements

This press release contains forward-looking statements relating to, among
other things, our expectations for third quarter financial results, including
revenue, bookings, net loss, non-GAAP net income and adjusted EBITDA, diluted
EPS and non-GAAP EPS; our outlook for full year 2012 bookings and adjusted
EBITDA; our actions to address near-term challenges, including potential
expense reductions; our strategy to transition from being a first party web
game developer to a multiplatform game network; and our future operational
plans, prospects and opportunities to expand our business. Forward-looking
statements often include words such as "outlook," "projected, " "intends,"
"will," "anticipate," "believe," "expect," and statements in the future tense
are generally forward-looking statements. The achievement or success of the
matters covered by such forward-looking statements involves risks,
uncertainties and assumptions.Our actual results could differ materially from
those predicted or implied and reported results should not be considered as an
indication of our future performance.Factors that could cause or contribute
to such differences include, but are not limited to, our relationship with
Facebook or changes in the Facebook platform or our agreements with Facebook,
our ability to launch new games in a timely manner and monetize these games
effectively, our ability to anticipate and address technicalchallenges that
may arise, our ability to control and reduce expenses, competition, the
changing interests of players, intellectual property disputes or other
litigation, asset impairment charges including any income tax impact resulting
from our impairment charge related to OMGPOP, our ability to retain key
employees, acquisitions by us and changes in corporate strategy or management.

More information about factors that could affect our operating results is
included under the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Quarterly
Report on Form 10-Q for the three months ended June 30, 2012, in our
registration statement on Form S-1, as amended, filed with the Securities and
Exchange Commission on March 23, 2012 and in our Annual Report on Form 10-K
for the year ended December 31, 2011, copies of which may be obtained by
visiting our Investor Relations web site athttp://investor.zynga.com or
theSEC'sweb site atwww.sec.gov. Undue reliance should not be placed on the
forward-looking statements in this release, which are based on information
available to us on the date hereof.There is no guarantee that the
circumstances described in our forward-looking statements will occur.
Weassume no obligation to update such statements. The financial information
set forth in this press release reflects our current preliminary estimates, is
subject to the completion of our third quarter review process, and is subject
to change. Our full third quarter and full year 2012 results could differ
materially from the preliminary estimates and outlook we have provided in this
press release.

Non-GAAP Financial Measures:

We have provided in this release non-GAAP financial information, including
bookings, adjusted EBITDA, non-GAAP net income and non-GAAP EPS. Management
uses these non-GAAP financial measures internally in analyzing our financial
results to assess operational performance and liquidity. The presentation of
this financial information is not intended to be considered in isolation or as
a substitute for the financial information prepared in accordance with
GAAP.We believe that both management and investors benefit from referring to
these non-GAAP financial measures in assessing our performance and when
planning, forecasting and analyzing future periods. We believe these non-GAAP
financial measures are useful to investors because they allow for greater
transparency with respect to key financial metrics we use in making operating
decisions and because our investors and analysts use them to help assess the
health of our business. We have provided reconciliations between our
preliminary estimated Q3 2012 non-GAAP financial measures to the most directly
comparable GAAP measures.However, we have not provided a reconciliation of
our bookings outlook to revenue for the full year 2012 or adjusted EBITDA
outlook to net income (loss) for the full year 2012 because certain
reconciling items necessary to accurately project revenue and net income
(loss) (including projected mix of virtual goods sold in our games, the
projected estimated average lives of durable virtual goods for our games and
the effective tax rate) cannot be reasonably projected due to a number of
factors, including variability from in a given period caused by changes in
player behavior and other factors.As revenue and/or net income (loss) for
future periods is a necessary input to determine all of these comparable GAAP
figures, we are not able to provide these reconciliations.

Some limitations of bookings and adjusted EBITDA are:

  oAdjusted EBITDA and non-GAAP net income do not include the impact of
    stock-based expense;
  oBookings, adjusted EBITDA and non-GAAP net income do not reflect that we
    defer and recognize revenue over the estimated average life of virtual
    goods or as virtual goods are consumed;
  oAdjusted EBITDA does not reflect income tax expense;
  oAdjusted EBITDA does not include other income and expense, which includes
    foreign exchange gains and losses and interest income; and the gain from
    the termination of our lease and purchase of our corporate headquarters
    building;
  oAdjusted EBITDA excludes both depreciation and amortization of intangible
    assets. Although depreciation and amortization are non-cash charges, the
    assets being depreciated and amortized may have to be replaced in the
    future;
  oAdjusted EBITDA does not include gains and losses associated with legal
    settlements; and
  oOther companies, including companies in our industry, may calculate
    bookings and adjusted EBITDA differently or not at all, which will reduce
    their usefulness as a comparative measure.

Because of these limitations, you should consider bookings and adjusted EBITDA
along with other financial performance measures, including revenue and our
financial results presented in accordance with GAAP. See the GAAP to non-GAAP
reconciliation below for further details.

ZYNGA INC.
RECONCILIATION OF GAAP TO NON-GAAP THIRD QUARTER ESTIMATES
(In thousands, except per share data, unaudited)
                                                 
                                                 Three months ended September
                                                  30, 2012
Reconciliation of Estimated Revenue to Estimated  
Bookings
Estimated revenue range                           $ 300,000 – 305,000
Estimated change in deferred revenue             (50,000)
Estimated Bookings Range                          $ 250,000 – 255,000
                                                 
Reconciliation of Estimated Net Loss to Estimated 
Adjusted EBITDA
Estimated net loss range                          $ (105,000) – (90,000)
Estimated impairment of intangible assets range   95,000 – 85,000
Estimated benefit from income taxes              (7,000)
Estimated other expense, net                     1,000
Estimated interest income                        (1,000)
Estimated legal settlements                      1,000
Estimated depreciation and amortization          39,000
Estimated stock-based expense                    37,000
Estimated change in deferred revenue             (50,000)
Estimated Adjusted EBITDA Range                   $10,000 – 15,000
                                                 
Reconciliation of Estimated Net Loss to Estimated 
Non-GAAP Net Loss
Estimated net loss range                          $ (105,000) – (90,000)
Estimated impairment of intangible assets range   95,000 – 85,000
Estimated stock-based expense                    37,000
Estimated amortization of intangible assets from  14,000
acquisitions
Estimated change in deferred revenue             (50,000)
Estimated legal settlements                      1,000
Estimated tax effect of Non-GAAP adjustments to   3,000 – 1,000
net loss range
Estimated Non-GAAP Net Loss Range                 $ (5,000) – (2,000)
                                                 
Estimated GAAP and Non-GAAP Diluted Shares        750,000 – 760,000
                                                 
Estimated Net Loss Per Share Range                $(0.14) – (0.12)
Estimated Non-GAAP Net Loss Per Share Range       $ (0.01) – 0.00

CONTACT: Investors - Krista Bessinger
         415-339-5266
         investors@zynga.com
        
         Press - Stephanie Hess
         415-503-0303
         press@zynga.com

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