Zynga 2014 Annual Report Download - page 28

Table of Contents
We expect to continue to actively monitor our costs, however, if we do not fully realize or maintain the anticipated benefits of any
restructuring actions and cost reduction initiatives, our business could be adversely affected. In addition, we cannot be sure that the cost
reduction initiatives will be as successful in reducing our overall expenses as expected or that additional costs will not offset any such reductions.
If our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses, our operating results will
suffer.
In addition, our cost-cutting measures could negatively impact our business including delaying the introduction of new games, impairing
our control environment, delaying introduction of new technology, impacting employee retention and morale.
We have a history of net losses and our revenue, bookings and operating margins may decline. We also may incur substantial net losses in
the future and may not achieve profitability.
The industry in which we operate is highly competitive and rapidly changing, and relies heavily on successful new product launches and
compelling content, products and services. As such, if we fail to deliver such content, products and services, do not execute our strategy
successfully or if our new content launches are delayed, our revenue, bookings and audience numbers may decline, and our operating results will
suffer. We have incurred significant losses since inception, including a net loss of $209 million in 2012, a net loss of $37 thousand in 2013 and a
net loss of $226 million for 2014. As of December 31, 2014, we had an accumulated deficit of $1.2 billion.
In addition, we believe that our operating margin will continue to experience downward pressure as a result of increasing competition. We
expect to continue to expend substantial financial and other resources on game development, including mobile games, our technology stack,
game engines, game technology and tools, the expansion of our network and international expansion. Our operating costs will increase and our
operating margins may decline if we do not effectively manage costs, launch new products on schedule that monetize successfully and enhance
our franchise games so that these games continue to monetize successfully. In addition, weak economic conditions or other factors could cause
our business to further contract, requiring us to implement significant additional cost cutting measures, including a decrease in research and
development, which could harm our long-term prospects.
If our revenues do not increase to offset these additional expenses, if we experience unexpected increases in operating expenses or if we
are required to take additional charges related to impairments or restructurings, we will continue to incur losses and will not become profitable
on a sustained basis. If we are unable to significantly increase our revenues or reduce our expenses, it will continue to negatively affect our
operating results and our ability to achieve and sustain profitability.
Our revenue, bookings and operating margins may decline.
The industry in which we operate is highly competitive and rapidly changing, and relies heavily on successful new product launches and
compelling content, products and services. As such, if we fail to deliver such content, products and services, do not execute our strategy
successfully or if our new content launches are delayed, our revenue, bookings and audience numbers may decline, and our operating results will
suffer. In addition, we believe that our operating margin will continue to experience downward pressure as a result of increasing competition.
We expect to continue to expend substantial financial and other resources on game development, including mobile games, our technology stack,
game engines, game technology and tools and international expansion. Our operating costs will increase and our operating margins may decline
if we do not effectively manage costs, launch new products on schedule that monetize successfully and enhance our franchise games so that
these games continue to monetize successfully. In addition, weak economic conditions or other factors could cause our business to contract,
requiring us to implement significant additional cost cutting measures, including a decrease in research and development, which could harm our
long-term prospects.
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