Zynga Files to Raise $1 Billion via IPO

http://techcrunch.com/2011/07/01/zynga-files-for-1-billion-ipo/

by devinfoley • 15 years ago

113 56 15 years ago

techcrunch.com

ashamedlion• 15 years ago

The tech IPO floodgate truly has opened. This is like the 5th high profile IPO within the past few weeks.

nckpark• 15 years ago

Indeed, but this time someone is actually making a profit! That's a refreshing change.

zacharycohn2• 15 years ago

I'd put a lot more on this than I would on Groupon. Zynga is profitable, scalable, and has a huge amount of dedicated fans - three things Groupon doesn't have.

tatsuke95• 15 years ago

There have been 64 internet stock IPOs so far this year.

Liu• 15 years ago

Maybe in Farmville cash...

lallysingh• 15 years ago

Hey, let's be careful. At this rate it may actually become real currency.

hugh32• 15 years ago

I'd invest in Farmville cash before I'd invest in bitcoin!

ahi• 15 years ago

A much better article. Techcrunch is useless. http://online.wsj.com/article/SB1000142405270230444780457641...

heh. Just realized the wsj article is 2 days old. Still better than TC's.

bproper• 15 years ago

Yeah - why do TC articles end up as #1 on big breaking topics? They have nothing to add but snark.

dstein• 15 years ago

Unfortunately there's no way to downvote articles, so I usually just click the flag link under TC headlines.

nikcub2• 15 years ago

there is zero snark in that post - just the s1 summarized

ignifero3• 15 years ago

Because of the emotionally provocative titles they choose.

mlinsey• 15 years ago

Lots and lots of people here read TechCrunch. It's still essentially the paper of record for the startup scene. Consequently, when major interesting news breaks, several different people see it on TechCrunch first and all submit the article at about the same time. The duplicate submissions count as upvotes, and just 5-10 of these immediately after an article breaks is enough to get a submission near the top for a short period of time, during which it's the first link on the story people coming to the HN frontpage see, so it gains momentum.

Honestly, I don't think TC is as bad as you characterize it, especially when it comes to breaking news (as opposed to high-level commentary). They've done a good job at breaking several big stories in the past year, even though I disagree with a lot of the more opinion-type pieces.

nikcub2• 15 years ago

that post is about the filing being a rumor. what happen an hour ago when this news broke was that the s1 was filed

markbao• 15 years ago

Hmm... $90.6 million of net income in 2010? Can it sustain the growth to justify a double-digit billion market cap?

maukdaddy4• 15 years ago

Absolutely not. A key quote from the WSJ article:

"That could value the game publisher, which had about $850 million in revenue last year, at roughly the same as the two biggest videogame publishers—Electronic Arts Inc. and Activision Blizzard Inc.—combined."

Lewisham• 15 years ago

This is bonkers, because Activision Blizzard alone are making money hand over fist with WoW. There's no way that Zynga is worth that much.

seanalltogether• 15 years ago

And on the numbers side EA and Act/Blizz brought in $8 Billion in revenue combined.

DevX101• 15 years ago

A few media outlets including http://twitter.com/#!/TheNextWeb have claimed this means Zynga has a $1 Billion valuation. That's not true. Zynga is RAISING $1 billion. Some of the stock will not be available on the IPO day.

hugh32• 15 years ago

So... how much of the company are they going to sell? Or haven't they announced this yet either?

A $1 billion valuation would seem awfully low, since last I heard they have multiple hundreds of millions (possibly half a billion) in revenue. I personally have concerns about the long-term sustainability of their business model, but I'd expect a valuation much higher than this.

Personally I won't invest. Too evil for my tastes.

18pfsmt• 15 years ago

While I don't know specifically how much equity they intend to sell, investment banks typically like to make their IPOs between $12-14/ share. Given their last VC round was funded by Morgan Stanley and T. Rowe Price [1], I would guess they will be shopping the deal among their investors to gauge interest, and then price the shares as they see fit.

[1]http://www.crunchbase.com/company/zynga

maukdaddy4• 15 years ago

I wouldn't touch this IPO for one major reason - reliance on FB. In fact, the first risk that Zynga lists in the filing docs:

"If we are unable to maintain a good relationship with Facebook, our business will suffer,” according to the filing. “Facebook is the primary distribution, marketing, promotion and payment platform for our games."

zacharycohn2• 15 years ago

But they have been moving away from their complete reliance on Facebook. It will always be a (major) distribution channel, but they've moved onto iPhone/Android apps too, and I'm sure they're planning on diversifying further.

maukdaddy4• 15 years ago

Yes, but the majority of the 1bn+ valuation rests on FB. That's exactly why it is listed first in the risks section.

ChuckMcM• 15 years ago

I agree in principle on the risk, but compared to the GroupOn S-1 it looks like the proverbial dogshit-into-gold product [1].

So the interesting thing is if they can plug into Google+ and do other things to keep usage up they will continue to print money. That is not as disruptive as what other folks are asking you to believe they might have to do to survive.

[1] http://techcrunch.com/2010/10/05/stupid-questions-vcs-ask/

ktsmith• 15 years ago

It very much looks like they are already integrated with Google+ so I'm not sure how reliant they will be long term.

kin2• 15 years ago

Facebook is just a client. Users, content, and data are all portable. If a user can access his or her Farmville world in 1 of 5 places, I don't think it's such a big deal that 1 of those places goes away, which itself is unlikely for now.

ignifero3• 15 years ago

No they're not. If they were, Zynga would have created their own portal. They did launch farmville.com for farmville. They did not launch cityville.com for cityville. That, imho, means they concede they can't make it on their own.

Here's the point of view of a former facebooker about zynga+facebook: http://www.quora.com/Will-Zynga-leave-Facebook

uuilly2• 15 years ago

I would. A friend who works at Zynga showed me around a week ago. It looked like Wall St. meets Silicon Valley. Real-time metrics scrolled across flat screens. And huge teams of engineers packed into single rooms plotted different ways to bilk housewives. It was the first software company I'd ever seen where money was the metric. They have a quarterly bonus schedule and everyone was aware of how much money they've made for the company. If it weren't for the giant cardboard cartoons hanging from the ceiling, the dyed hair and the dogs, it would be indistinguishable from my sister's high yield bond desk at Morgan Stanley.

That beast is hungry. I wouldn't bet against it.

maukdaddy4• 15 years ago

Sorry but that sounds like an absolutely awful place to work. :(

rokhayakebe• 15 years ago

That is nice and all, but it isn't argument against his fear.

hoyhoy• 15 years ago

Betting _for_ this is like betting against humanity!

localhost30002• 15 years ago

could the focus on bottom-line have anything to do with the CEO's top-tier MBA? after all, The Wall Street Way is what they teach MBAs, right?

nostrademons3• 15 years ago

It's ironic that they're IPOing before Facebook...

aninteger• 15 years ago

"As of March 31, Zynga had 1,858 employees -- 64% of whom have been there less than one year. More than 90% of Zynga's staff has been with the company for less than two years."

Has any other company in recent history grown this fast?? Did Facebook or Myspace grow this quick?

skimbrel• 15 years ago

The story I've heard to explain this is that it isn't the growth rate so much as the turnover. I have friends who joined Zynga straight out of college (Berkeley) and are looking around for something new a year later, now that they have some vesting in their options. It really doesn't sound like a pleasant place to work -- I was told eighty-hour weeks are the norm.

That said, Groupon has something like 8,000 employees, most of whom were hired in the last two years.

skizm• 15 years ago

I really enjoyed the quote from founder Mark Pincus: " Games should be accessible to everyone, anywhere, any time; Games should be social; Games should be free; Games should be data driven and; Games should do good."

I hope more game developers take this (especially the last point) to heart. Too many game developers are latching onto publishers who demand games on an unreasonable timeline. To give one example, Valve is a testament to how putting the appropriate amount of time into development of a game produces great results (not to mention an amazingly loyal fan base).

That said I do understand game companies need money to produce these games but I do think a culture shift is in order and publishers need to realize great games take time. I think they undervalue how much more money a great game make than a good game. Also nothing builds more hype than anticipation!

breck2• 15 years ago

How did brad Feld get 30M shares? Just curious.

rfrey• 15 years ago

There were probably originally 10,000,000 or 100 million shares authorized. That would have been split several times before IPO.

anatari• 15 years ago

If you look in the footnotes, it includes the shares his fund, Foundry, owns.

breck2• 15 years ago

Ah, thanks!

ozziegooen• 15 years ago

I'm not very familiar with corporate management salaries, but these kind of seem silly. Example: Mark Pincus made a 300k salary in 2010, what may be a 100% annual cash bonus, plus quarterly bonuses of "$22,500, $0, $75,000 and $37,500, "

Zynga Files to Raise $1 Billion via IPO

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