Zynga 2015 Annual Report Download - page 17

Table of Contents
Ouroperatingresultsarevolatileanddifficulttopredict,andourstockpricemaydeclineifwefailtomeettheexpectationsofsecuritiesanalystsorinvestors.*
Our bookings, revenue, adjusted EBITDA, player traffic and operating results have fluctuated in the past and could vary significantly from quarter-to-quarter
and year-to-year and may fail to match our past performance or the expectations of securities analysts or investors because of a variety of factors, some of which
are outside of our control. Any of these events could cause the market price of our Class A common stock to fluctuate. Factors that may contribute to the variability
of our operating results include the risk factors listed in these “Risk Factors” and the factors discussed in the section titled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Factors Affecting Our Performance.”
In particular, it is difficult to predict when bookings from one of our games will begin to decline, the decay rate for any particular game, which is the speed at
which the popularity and player usage for a game declines and the commercial success of our new games. Our business depends on our ability to consistently and
timely launch new games or versions of games that achieve significant popularity and have the potential to become franchise games as bookings from our older
games decline. It is difficult for us to predict with certainty when we will launch a new game as games may require longer development schedules or soft launch
periods than we expect to meet our quality standards. For example, our experience in 2014 and 2015 launches has caused us to extend soft launch periods for
certain of our games during 2015, including a move in the launch of Dawn of Titans and CSR Racing 2 from 2015 to 2016, which results in a delay in significant
bookings for the games. If decay rates are higher than expected in a particular quarterly period and/or we experience delays in the launch of new games that we
expect to offset these declines and/or new games do not monetize well, we may not meet our expectations or the expectations of securities analysts or investors for
a given quarter.
In addition, we recognize revenue from the sale of our virtual goods in accordance with U.S. GAAP, which is complex and based on our assumptions and
historical data with respect to the sale and use of various types of virtual goods. In the event that such assumptions are revised based on new data or there are
changes in the historical mix of virtual goods sold due to new game introductions, reduced virtual good sales in existing games or other factors or there are changes
in our estimates of average playing periods and player life, the amount of revenue that we recognize in any particular period may fluctuate significantly. In
addition, changes in the policies of Facebook, Apple, Google or other third party platforms or accounting policies promulgated by the SEC and national accounting
standards bodies affecting software and virtual goods revenue recognition could further significantly affect the way we report revenue related to our products. Such
changes could have an adverse effect on our reported revenue, net income and earnings per share under U.S. GAAP. For further information regarding our revenue
recognition policy, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies
—Revenue Recognition” in this Annual Report on Form 10-K.
Given the rapidly evolving social game industry in which we operate, our historical operating results may not be useful in predicting our future operating
results. In addition, metrics we have developed or those available from third parties regarding our industry and the performance of our games, including DAUs,
MAUs, MUUs, MUPs and ABPU may not be indicative of our future financial performance. This could cause the market price of our Class A common stock to
fluctuate.
Asmallnumberofgameshavegeneratedamajorityofourrevenue,andwemustcontinuetolaunch,innovateandenhancegamesthatplayerslikeandattract
andretainasignificantnumberofplayersinordertogrowourrevenueandsustainourcompetitiveposition.*
Historically, we have depended on a small number of games for a majority of our revenue and we expect that this dependency will continue for the
foreseeable future. Bookings and revenue from many of our games tend to decline over time after reaching a peak of popularity and player usage. As a result of this
natural decline in the life cycle of our games, our business depends on our ability to consistently and timely launch new games across multiple platforms and
devices that achieve significant popularity and have the potential to become
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