Zynga


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Topics covered in report:
  1. Overview
  2. Business Model(s)
  3. Scale
  4. Management Team
  5. Investors And Valuation
  6. Summary of Ownership Table (Estimated)
  7. Board Of Directors
  8. Management Equity/Commitment
  9. Selected Acquisitions And M&A Risk Assessment
  10. Acquisition/Partnership/Investment/ Integration Opportunities
  11. Product/Technology/Platform
  12. SWOT Analysis
  13. Competitive Analysis
  14. Industry Growth
  15. Selected Competitors
  16. Cursory, Long Term Valuation Thoughts And Valuation Comparables
  17. Concerns
  18. Financial Statements
  19. MidasLP Accredited Investor Form
Founded in 2007 by Mark Pincus and Eric Schiermeyer and located in San Francisco, CA, Zynga is the largest social‐network game developer and has generated over $1.5 billion in cumulative bookings since its inception. Zynga develops browser‐based games that work both stand‐alone and as application widgets on social networking websites such as Facebook and MySpace. Zynga’s mission is to connect the world through games by making them easily accessible as well as simple to play. As of September 2011, Zynga’s games have over 232 million monthly active users on Facebook. Four of the five most popular social gaming applications on Facebook are Zynga games: CityVille, Empires & Allies, Texas HoldEm Poker and FarmVille.  Zynga has approximately 2000 employees in 5 countries including China, Japan, Germany, Toronto and India. Zynga filed with the SEC to raise up to $1 billion in an initial public offering on July 1, 2011. According to AppData, as of June 30, 2011, Zynga has more monthly average users on Facebook than the next 15 social game developers combined. Additionally, as of June 30, 2011, Zynga has more daily average users than the next 30 social games combined. According to Zynga’s October 13, 2011 S‐1 filing, the company has users in 166 countries. The U.S. represents 66% of Zynga’s revenues with $343 million for the six months ended June 30, 2011. No country other than the U.S. exceeded 10% of Zynga’s total revenues. On October 11, 2011, Zynga announced plans to develop “Project Z,” a platform for playing social games and chatting with friends powered by Facebook Connect.  Zynga’s relationship with Facebook includes a five‐year agreement to exclusively use Facebook credits. All covered Zynga games that use Facebook integration must remain exclusive to Facebook for the duration of the agreement, and Zynga is prohibited from releasing new games on an undisclosed list of other social networks. Zynga is also required to notify Facebook of any new games at least a week prior to their release. In return Facebook agrees to help Zynga reach certain growth targets for monthly unique users of covered Zynga games, and to share ad revenues with Zynga. According to Zynga’s October 13, 2011 S‐1 filing, the company’s Q2 2011 revenue was $279.1 million, an increase of 15% in Q2 2011 from Q2 2011. Zynga’s advertising revenue increased $19.5 million or 227% from the six months ended June 30, 2010 to the six months ended June 30, 2011. The increase of advertising revenue is due to a $12.2 million increase of in‐game offers, sponsorships and engagement ads. Zynga also disclosed it conducted a “third‐party” valuation in August 2011 that assumed a $14.05 billion value for Zynga’s stock.
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