

Zynga Profits, Users Decline - Impossible
http://www.gamasutra.com/view/news/37416/Zynga_Profits_Users_Decline_Ahead_Of_Proposed_1B_IPO.php

======
danmaz74
According to the article, Zynga made quarterly (or yearly?) profits of $1.3M
out of revenues of $279M. If I'm not missing anything important, this means
that the company had to sustain expenses of over 277 million dollars during
the quarter.

The company says that it "spent more than it traditionally had on hiring,
acquisitions, and its international growth." But does anybody have an idea
about where did all that money actually go? I would have expected a company
like Zynga to be much more profitable.

~~~
vtail
You can find everything that Zynga has reported here (particularly p. 59):
[http://www.sec.gov/Archives/edgar/data/1439404/0001193125112...](http://www.sec.gov/Archives/edgar/data/1439404/000119312511253371/d198836ds1a.htm)

When they (Gamautra) say "year-on-year", they actually compare Q2 2011 to Q3
2010, which is not standard; in general, you would want to compare Q2 to Q2 to
account for seasonality of demand etc.

You can see that their sales and marketing expenses stayed roughly the same
over the last 3 quarters, but there is a huge rise in R&D (almost 2x from Q4
10 to Q2 11), G&A and some small increase in cost of revenue (Facebook
credits?).

~~~
vtail
All numbers are in mn USD

Revenue Q3 2010 .. Q2 2011: $170.7 $195.8 $242.9 $279.1

Total cost and expenses: 136.4 124.3 206.7 266.1

\- Cost of revenue: 49.9 51.6 67.6 78.1

\- R&D: 39.8 51.5 71.8 95.7

\- Sales and marketing: 28.9 38.3 40.2 38.1

\- General and administrative: 17.8 (17.1) 27.1 54.2

Income (loss) from operations: 34.3 71.5 36.2 13.0

Net income: 27.2 43.0 16.8 1.4

~~~
kokey
Spending lots on R&D, and sales spend being flat while revenues increasing
like that. Looking pretty healthy to me.

~~~
zerostar07
On the other hand they appear to be overspending in R&D, given that their
primary products are derivative copycats of everything that's popular. (or are
bandwidth and servers considered R&D?)

~~~
Kadrith
Maybe they are trying to create something big that is not a copycat.

