Zynga 2014 Annual Report Download - page 62

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Table of Contents
data usage, an $11.7 million decrease in third party customer service expense which is in line with the discontinuance of certain games and a
$5.1 million decrease in headcount-related expense, offset by a $36.8 million increase in payment processing fees from mobile payment
processors due to an increase in mobile bookings and a $6.3 million increase in royalty expense for licensed intellectual property.
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.
Research and development
2014 Compared to 2013. Research and development expenses decreased $16.4 million in the twelve months ended December 31, 2014 as
compared to the same period of the prior year. The decrease was primarily attributable to a $46.4 million decrease in headcount-related
expenses, $13.7 million decrease in restructuring expense and a $13.7 million decrease in allocated facilities and overhead costs, offset by $32.7
million of expense recorded in 2014 to reflect the change in estimated fair value of the contingent consideration liability for Spooky Cool Labs
and a $21.7 million increase in stock-based expense primarily due to higher forfeiture credits in the prior year and additional grants in 2014 as a
result of the NaturalMotion acquisition in February 2014.
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.
Sales and marketing
2014 Compared to 2013. Sales and marketing expenses increased $53.0 million in the twelve months ended December 31, 2014 as
compared to the same period of the prior year. The increase was primarily attributable to a $57.8 million increase in marketing expense due to
higher mobile player acquisition costs and consumer marketing costs from the launch of FarmVille 2: Country Escape and Hit it Rich! Slots ,
offset by a $3.1 million decrease in headcount-related expenses and a $2.2 million decrease in stock-based expense primarily due to forfeiture
credits resulting from employee attrition.
2013 Compared to 2012. Sales and marketing expenses decreased $77.5 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 $41.6 million decrease in player acquisition costs
which declined along with our overall spending during 2013 due to declines in bookings and DAUs, a $16.6 million decrease in stock-based
expense primarily due to forfeiture credits resulting from employee attrition, a $9.0 million decrease in headcount related expenses, and $4.3
million decrease in third party consulting service expense.
59
Year Ended December 31,
2013 to 2014
% Change
2012 to 2013
% Change
2014
2013
2012
(in thousands)
Research and development
$
396,553
$
413,001
$
645,648
(4
)%
(36
)%
Year Ended December 31,
2013 to 2014
% Change
2012 to 2013
% Change
2014
2013
2012
(in thousands)
Sales and marketing
$
157,364
$
104,403
$
181,924
51
%
(43
)%