zynga presentation-corporate strategy
TRANSCRIPT
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Team membersMateo Fadul Gonzalez
Rafael NavarroDomenic Millen
Aman MehraSiriorn Vichaiwatanapanich
Nabeeha Qazi
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• Company Overview• Zynga’s Industry Position• Revenue Composition • Company Value Chain Evolution• Financial Analysis• Strategy Analysis• Zynga’s Future Prospects
Agenda
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• Created in January 2007 and based in San Francisco, California
• The world’s leading provider of social game services
• Social Networks dependent (i.e. Facebook), also Mobile and Zynga.com
• Social games & internet gaming pioneer
• Leadership position: investment in their people, content, brand, technology and infrastructure
• Connect the world through games
Overview
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Profit PoolProfit pool largely dominated by Retailers and Software developers
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Zynga’s Industry Position• Develops its own
content and software
• Offer games through online & mobile platforms
• Use of existing infrastructure (PC & social websites)
• Huge savings (+ Profit)
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Revenue Stream
Online Gaming (89%) Advertising(11%)
• Consumable Virtual Goods (energy)• Durable Virtual Goods (tractors)
30%70%
Geographical Distribution
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Revenue Stream
• Zynga top three games accounts for 55% of Revenues, of the remaining 45%, no single accounts for more than 10%
55%
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Timeline
Company started
First sale of virtual goods
Aquisition of YoVille
First 3rd party in-game advertising
IPO Launched Draw Something
Real-money gambling
Expand API to increase game penetration
Texas Holdem
Expanded virtual goods concept to other games
Facebook notific-ations
Large rollout of mobile games
Large scale in-game advertising
Slashed workforce
Application program-ming interface (API)
Expand real-money gambling business
Launched Farmville
Agreement with Facebook signed
Facebook credits
Agreement with Facebook revised
Zynga with Friends
2007 2008 2009 2010 2011 2012 2013 2014 2015
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Financial Performance
2009 2010 2011 2012 -
200,000.00
400,000.00
600,000.00
800,000.00
1,000,000.00
1,200,000.00
1,400,000.00
Online gameAdvertisingTotal Revenue
570%
85%
7%
-36% 226%84%
Revenue Growth (in thousands $)
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Financial Ratios
2009 2010 2011 2012
-50%
-40%
-30%
-20%
-10%
0%
10%
-43%
5%
-35%
-16%
Profit margin
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Financial Ratios
2009 2010 2011 2012 -
0.20
0.40
0.60
0.80
1.00
1.20 1.08
0.57
0.30 0.29
Debt Ratio
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Financial Ratios
2009 2010 2011 2012
ROA -0.20406570651502 0.0250725346314665
-0.16065668353832
8
-0.08129735436591
73
ROE 2.45935375733309 0.0578476405752621
-0.23109859225773
2
-0.11473440470927
7
-25.00%
25.00%
75.00%
125.00%
175.00%
225.00%
275.00%
ROA & ROE
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Financial Evaluation
ZNGA DNACF EAMarket Cap: 2.76B 3.43B 5.61BEmployees: 3,058 1,810 9,200Revenue (ttm): 1.28B 2.45B 3.96BGross Margin (ttm): 73% 74% 64%EBITDA (ttm): 54.00M 1.05B 393.00MOperating Margin (ttm): -7% 40% 4%Net Income (ttm): -209.45M 561.80M 175.00MNet Profit Margin : -16% 23% 4%EPS (ttm): -0.28 4.02 0.55P/ E (ttm): N/A 6.33 34.17PEG (5 yr expected): -3.35 N/A 1.43P/ S (ttm): 2.16 1.39 1.41
Compare to 2 main competitors:
ZNGA = Zynga, Inc.DNACF = DeNA Co., Ltd.EA = Electronic Arts Inc.
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Industry Future Prospects
Mobile games becoming popular
Growing competitionfrom US & Intl. firms
Facebook opening up to more game developers
Demand for sophisticated games driving up costs
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Zynga’s Future Prospects
Established customers (players) base
Reduced dependence on Facebook
Constant adaptations/Innovations
Core mgt. team is not the same
Reduced R&D expenses
Business integration issues
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Zynga’s Future Prospects
Industry Attractiveness
High Medium Low
Med
ium
Low
Hig
h
Busi
ness
Pos
ition
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Zynga
Thank You...Q&A