New SEC filing puts Zynga valuation at $11 billion in March

Game company reveals valuation, credit line, and new hires in amended S-1 filing for IPO.

Zynga updates its S-1 filing for an initial public offering.
Zynga updates its S-1 filing for an initial public offering. Zynga

Gaming company Zynga had an internal valuation of more than $11 billion in March, according to an amended version of the S-1 registration it filed today on its path to raise $1 billion in an initial public offering.

"In March 2011, we obtained a third-party valuation report that used recent arms length transactions in our stock as the primary indication of value. These transactions indicated a valuation of $11.15 billion based on fully diluted shares outstanding," the filing with the U.S. Securities and Exchange Commission said.

Zynga also revealed that it had received a revolving line of credit from Morgan Stanley and others in July that allows it to borrow up to $1 billion, and that it added $7.5 million to its first-quarter revenue after revising the way it accounts for the average playing time of its paying users. Less than 5 percent of its players pay, but increasing the number of players is important in the long run because the more players they have, the more valuable the games become overall, the company said in its filing.

The maker of FarmVille, CityVille, Mafia Wars, and Words with Friends hired 300 people since its last filing and now has 2,543 employees, according to the document.

"We are the world's leading social game developer with 232 million average monthly active users in 166 countries," the filing said. "Currently, substantially all of our revenue is generated from players accessing our games via the Facebook platform," where the company said it has the top five games based on daily active users.

"Our top three games historically have contributed the majority of our revenue," the company said. "Our top three games accounted for 93 percent, 83 percent, 78 percent, and 63 percent of our online game revenue in 2008, 2009, 2010, and in the first quarter of 2011, respectively."

Meanwhile, business is booming. Revenue increased from $19.4 million in 2008 to $597.5 million last year, and the company went from a net loss of $22.1 million to a net profit of $90.6 million in that time. Revenue for the first quarter rose to $242.9 million from $100.9 million year-over-year, and net income rose to $16.8 million from $6.4 million a year earlier. The company filed to go public last month.

 

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