Zynga 2012 Annual Report Download - page 46

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Bookings is a non-GAAP financial measure that is equal to revenue recognized during the period plus the
change in deferred revenue during the period. We record the sale of virtual goods and mobile downloads as
deferred revenue and then recognize that revenue over the estimated average payer life or as virtual goods are
consumed. Advertising sales that consist of certain branded virtual goods and sponsorships are also deferred and
recognized over the estimated average life of the branded virtual good, similar to online game revenue. For
additional discussion of the estimated average life of durable virtual goods, see the section titled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Revenue Recognition” elsewhere in
this Annual Report on Form 10-K.
We use bookings to evaluate the results of our operations, generate future operating plans and assess the
performance of our company. While we believe that this non-GAAP financial measure is useful in evaluating our
business, this information should be considered as supplemental in nature and is not meant as a substitute for
revenue recognized in accordance with GAAP. In addition, other companies, including companies in our
industry, may calculate bookings differently or not at all, which reduces its usefulness as a comparative measure.
The following table is a reconciliation of revenue to bookings for each of the periods presented:
Year Ended December 31,
2012 2011 2010 2009 2008
Reconciliation of Revenue to Bookings:
Revenue .................................. $1,281,267 $1,140,100 $597,459 $121,467 $19,410
Change in deferred revenue ................... (133,640) 15,409 241,437 206,603 16,538
Bookings .................................. $1,147,627 $1,155,509 $838,896 $328,070 $35,948
In July 2010, we began migrating to Facebook Credits as the primary payment method for our games played
through Facebook, and by April 2011, we had completed this migration. Facebook remits to us an amount equal
to 70% of the face value of Facebook Credits purchased by our players for use in our games. We record bookings
and recognize revenue net of amounts retained by Facebook. Prior to the adoption of Facebook Credits, we
recorded a majority of our online game revenue at the gross price charged to the customer.
Adjusted EBITDA
To provide investors with additional information about our financial results, we disclose within this Annual
Report on Form 10-K adjusted EBITDA, a non-GAAP financial measure. We have provided below a
reconciliation between adjusted EBITDA and net income (loss), the most directly comparable GAAP financial
measure.
We have included adjusted EBITDA in this Annual Report on Form 10-K because it is a key measure we
use to evaluate our operating performance, generate future operating plans, and make strategic decisions for the
allocation of capital. Accordingly, we believe that adjusted EBITDA provides useful information to investors and
others in understanding and evaluating our operating results in the same manner as our management and board of
directors. While we believe that this non-GAAP financial measure is useful in evaluating our business, this
information should be considered as supplemental in nature and is not meant as a substitute for the related
financial information prepared in accordance with GAAP.
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