Unlike some of the other companies that have filed for IPOs, Zynga appears to be a very big and healthy business.
It generated $235 million in revenue for the March quarter, which is up 153% from the same period a year ago when it generated $101 million. The company’s net income is $11.8 million for the quarter, up from $6.4 million in the same period a year prior.
While it’s a solid profit, it’s nowhere near the crazy profits being rumoured prior to the filing. In February, the WSJ reported Zynga had $400 million in profit on $800 million in revenue for 2010. Zynga’s official numbers for 2010: $58 million in net income on $597 million revenue*.
In this chart you can see net income was down quarter over quarter. Reading through the S1 it looks like that’s thanks to an increase in headcount, which affects R&D and administrative costs, as well as increased investment in web-hosting costs to accommodate more players using Zynga.
*UPDATE: A reader writes into note that part of this confusion may come from a difference between GAAP and non-GAAP measurements.
In Zynga’s S1, it says it looks at a non-GAAP revenue and adjusted EBITDA measurement to measure itself. The non-GAAP revenue measurement counts revenue all at once as it is booked, where as GAAP revenue is deferred over the “estimated average life” of a virtual good. Adjusted EBITDA also factors in the revenue as an upfront payment.
Zynga’s adjusted EBITDA for 2010 was $400 million, and its non-GAAP revenue was $839 million.
While some companies may fiddle with non-GAAP numbers to make themselves look better our reader thinks this is a legitimate way of looking at the company’s performance.
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