Zynga 2013 Annual Report Download - page 56

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Table of Contents
revenue, offset by a decrease of $16.6 million from in-game offers, engagement ads and other advertising revenue.
Cost of revenue
2013 Compared to 2012. Cost of revenue decreased $103.8 million in the twelve months ended December 31, 2013 as compared to the
same period of the prior year. The decrease was primarily attributable to a decrease of $47.0 million in third party hosting expense due to
increased usage of our own datacenters, a decrease of $24.6 million in third party customer service expense which is in line with the decline in
DAUs and the discontinuance of certain games, a decrease of $11.6 million in stock-based expense primarily due to forfeiture credits resulting
from employee attrition, a decrease of $9.3 million in depreciation and amortization expense, and a decrease of $7.9 million in payment
processing fees.
2012 Compared to 2011.
Cost of revenue increased $22.1 million in the twelve months ended December 31, 2012 as compared to the same
period of the prior year. The increase was primarily attributable to an increase of $31.5 million in depreciation and amortization expense related
to property and equipment acquired to support our network infrastructure and acquired intangibles, an increase of $24.6 million in third-party
payment processing fees and an increase of $5.3 million in consulting costs primarily related to third-party customer support. These increases in
costs of revenue were partially offset by a decrease of $30.4 million in maintenance and hosting costs in the twelve months ended December 31,
2012, and a decrease of $5.5 million in stock-based expense mainly due to expense recognized related to ZSUs. Stock-based expense associated
with ZSUs in 2012 did not include the IPO related catch-up of expense, which had been recognized in 2011 upon the completion of the IPO.
Research and development
2013 Compared to 2012.
Research and development expenses decreased $232.6 million in the twelve months ended December 31, 2013 as
compared to the same period of the prior year. The decrease was primarily attributable to a $138.7 million decrease in stock-based expense
primarily due to forfeiture credits resulting from employee attrition and an $87.0 million decrease in headcount-related expenses.
2012 Compared to 2011. Research and development expenses decreased $81.4 million in the twelve months ended December 31, 2012 as
compared to the same period of the prior year. The decrease was primarily attributable to a $174.3 million decrease in stock-based expense.
Stock-based expense associated with ZSUs in 2012 did not include the IPO related catch-up of expense, which had been recognized in 2011
upon the completion of the IPO. These decreases were partially offset by an increase of $66.2 million in headcount-related expenses, an increase
of $10.7 million in facilities and other overhead support costs and an increase of $8.1 million in consulting costs.
Sales and marketing
52
Year Ended December 31,
2012 to 2013
% Change
2011 to 2012
% Change
2013
2012
2011
(in thousands)
Cost of revenue
$
248,358
$
352,169
$
330,043
(29
)%
7
%
Year Ended December 31,
2012 to 2013
% Change
2011 to 2012
% Change
2013
2012
2011
(in thousands)
Research and development
$
413,001
$
645,648
$
727,018
(36
)%
(11
)%
Year Ended December 31,
2012 to 2013
% Change
2011 to 2012
% Change
2013
2012
2011
(in thousands)
Sales and marketing
$
104,403
$
181,924
$
234,199
(43
)%
(22
)%