Zynga files for IPO

The FarmVille creator lays out key numbers in its SEC filing, including its first-quarter profit, as it joins the rush of start-ups that see promise in being publicly traded.

After a bit of a delay, FarmVille creator Zynga has announced plans to go public.

The company filed its Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) today. According to the company, some of the shares will be sold by Zynga, while the remaining shares will be sold by "certain stockholders." Zynga has enlisted Morgan Stanley, Goldman Sachs, and Merrill Lynch, among other investment banks, to act as underwriters.

According to The New York Times, citing "a figure used to calculate the registration fee," Zynga is expecting to raise about $1 billion in the initial public offering. So far, the number of shares Zynga will offer and how much those shares will be priced at has not been announced.

Zynga joins a growing throng of start-ups that have decided to offer their shares on the open market. LinkedIn started selling its shares on the New York Stock Exchange in May, and saw its stock price jump 109 percent in its first day of trading. Groupon announced its plans to go public last month in an IPO valued at $750 million. Daily-deals provider and Groupon rival LivingSocial is also reportedly planning to go public .

See also:
• BNET: Zynga IPO--Real profit puts zing in its public offering

Zynga was founded in 2007 by Mark Pincus. Since then, it has become a social-gaming powerhouse, offering several titles, including FarmVille, CityVille, and FrontierVille, that have captivated gamers around the globe. Much of the company's success has come via Facebook, but it also offers FarmVille and Mafia Wars, among several other titles, on mobile platforms .

That popularity has helped the social-gaming company see its financial performance improve greatly over the last several years.

In 2008, Zynga suffered a loss of $22.1 million on revenue of $19.4 million. By 2009, the company's revenue grew to nearly $121.5 million, and its losses deepened to $52.8 million. Last year, however, Zynga turned a profit of $90.6 million on revenue of $597.4 million.

Zynga today, by the numbers
According to today's SEC filing, things are still looking up for Zynga this year. During the first three months of 2011, the company earned $235.4 million in revenue and generated an $11.8 million profit. Zynga did not immediately respond to a request for comment on why its profit, as a percentage of revenue, slid during the first quarter, compared with last year.

There's a wealth of additional knowledge about Zynga's operations to be found in its SEC filing.

For one, Zynga reported that it has 232 million monthly active users and 60 million daily active users from 166 countries around the world. Every second, 38,000 virtual items are created in its wildly popular worlds. Each day, 2 billion minutes are logged in Zynga's titles.

Zynga's revenue growth over the years.
Zynga's revenue growth over the years. Zynga

However, Zynga did acknowledge that it's facing some potential risks. And perhaps the most important risk it faces involves its relationship with Facebook.

Last year, Zynga announced a partnership with Facebook that would see the game company rely on the social network's virtual currency, Facebook Credits, for all in-game purchases. According to Zynga's filing, it completed the transition to Facebook Credits in April, and that arrangement will stay in effect until 2015. As part of the deal between the firms, Zynga must hand over to Facebook 30 percent of all revenue generated by its games.

Though things between the companies are fine now, Zynga admits in its filing that "if we are unable to maintain a good relationship with Facebook, our business will suffer." In the notes to the company's financial statements, Zynga revealed that its accounts receivable at the end of March were made up of 82 percent of the revenue owed to it by Facebook.

Earlier this week, CNBC reported that Zynga would be filing its S-1 statement with the SEC on Wednesday. After Zynga failed to do so, Reuters reported that the company was actually planning to file with the SEC yesterday.

Updated at 10:01 a.m. PT and at 10:12 a.m. PT to include more details.

zynga S1

 

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