The farm goes public - Zynga
Zynga, the maker of that massively popular Facebook game -- and several others -- has filed the paperwork for an Initial Public Offering. The four-year old firm says it expects to raise $1 billion in the process, though it's possible (and, in fact, expected) that it could offer more shares and raise more money when the stock eventually begins trading.
Because the amount a company says it plans to raise in its initial IPO filing is used to calculate registration fees, the final size of the IPO could be different. Many media outlets had previously quoted sources saying the IPO was expected to raise between $1.5 billion and $2 billion.
If it does, that would put the company's valuation at between $15 billion and $20 billion -- more than any other publicly traded game company, including Call of Duty and World of Warcraft publisher, Activision-Blizzard.
For non-investors, the filing offers the first glimpse behind the curtain at the company and gives a good look at how profitable "free" social network games can be.
Last year, Zynga says it had profits of $90.6 million, with revenue hitting $597.5 million. In the first three months of 2011, it has already earned $11.8 million and had sales of $235.4 million.
At the end of March, the company was averaging 62 million daily active users of its games. Collectively, they spend 2 billion minutes per day playing those games. And the number of people playing them has increased steadily since last September.
That's a lot of virtual farmers.
While most people never give Zynga a dime, smaller sets of hardcore players are the company's lifeblood. Zynga said in its S-1 filing with the SEC that it relies on a "small percentage of our players for nearly all of our revenue." It did not break out exactly what percent of players pay, however. The company also makes money from in-game advertising.
Zynga underscored the importance of its relationship with Facebook in the filing, noting that it had a contract covering its service terms with the network through 2015. It's also expected to be a part of Google's burgeoning social network platform, Google +, though it did not address that in its filing.
Play Bricks Breaking on Yahoo! Games:
- in-game advertising
- Wall Street
- World of Warcraft
- Call of Duty
- social network games