Zynga 2014 Annual Report Download - page 59

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Table of Contents
New market development. We are investing in new distribution channels, mobile platforms and international markets to expand our reach
and grow our business. For example, we have continued to hire additional employees and acquire companies with experience developing mobile
applications. Our ability to be successful will depend on our ability to develop a successful mobile network, obtain new players and retain
existing players on new and existing social networks and attract advertisers.
In the first quarter of 2014, we completed the acquisition of NaturalMotion, the maker of Clumsy Ninja and CSR Racing . This allowed us
to enter into two new consumer categories—People Simulation and Racing—
and our future success is dependent upon our ability to leverage the
games, workforce, and technology we acquired.
As we expand into new markets and distribution channels, we expect to incur headcount, marketing and other operating costs in advance of
the associated bookings and revenue. Our financial performance will be impacted by our investment in these initiatives and their success.
Hiring and retaining key personnel. Our ability to compete and grow depends in large part on the efforts and talents of our employees. In
2014, in addition to employee attrition, we have also implemented, and continue to implement, certain cost reduction initiatives to better align
our operating expenses with our revenue, including reducing our headcount and consolidating certain facilities. For example, in the first quarter
of 2014, we implemented a restructuring plan that included a work force reduction. These cost reduction initiatives could negatively impact our
ability to attract, hire and retain key employees which is critical to our ability to grow our business and execute on our business strategy.
Results of Operations
The following table sets forth our results of operations for the periods presented as a percentage of revenue for those periods:
56
For the Year Ended December 31,
2014
2013
2012
Consolidated Statements of Operations Data
:
Revenue
100
%
100
%
100
%
Costs and expenses:
Cost of revenue
31
28
27
Research and development
57
48
50
Sales and marketing
23
12
14
General and administrative
24
19
15
Impairment of intangible assets
—
1
7
Total costs and expenses
135
108
113
Income (loss) from operations
(35
)
(8
)
(13
)
Interest income
—
—
—
Other income (expense), net
1
—
1
Income (loss) before income taxes
(34
)
(8
)
(12
)
Provision for (benefit from) income taxes
(1
)
(3
)
4
Net income (loss)
(33
)%
(5
)%
(16
)%