ZNGA - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Zynga Fourth Quarter and Full-Year 2017 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, this conference is being recorded. I will now introduce your host for today's conference, Ms. Lau. Rebecca – Relations. may Director, of you Investor Ma'am, Ma'am, begin. you may

Rebecca Lau

welcome Zynga's you, earnings call. Thank quarter to fourth and

our Shortly, On Frank call Executive Griffin, Gibeau, call for our Financial the with Chief Officer; me live questions. and up will open we today are Chief the Officer. Gerard

Please During of results the for expectations our our we performance. Actual today's our details. will related more from forward-looking statements review as the our as business in filings SEC as predicted. recently well differ factors course may results materially Form to for filed in plan well call, our make and risk strategy, future elsewhere as most XX-Q,

financial addition, will discuss In we non-GAAP measures. also

for GAAP look slides, is be Investor hours. when will conference to and letter, will and substitute these our results. intended a be at available This earnings replay or superior financial earnings Our measures. GAAP as are sure a not being and measures few webcasted Please the website of our non-GAAP in to audio filed, XX-K to non-GAAP reconciliations on call our for be include Relations reconciliations our

to I'll over his Now, opening turn remarks. for Frank call the

Frank D. Gibeau

for new were mobile $XXX.X In million, a strongest you company. past and year-over-year. a anchored top record Rebecca. up and up This generated mobile our and in a Bookings you, all-time bookings afternoon, five Words Friends We quarter game reaching revenue launch we business. Revenue With quarter performance $XXX.X of joining the momentum our hit with QX, great highs X, by continued holiday thank mobile million, we the Good call. nearly our had end Thank years. to year XX% across strong and year-over-year. line was for XX% the our new

as $XX.X profitability million, in year-over-year. net EBITDA as $XX.X million, $XX.X up our income million million We $XX.X up achieving quarter, by of well the year-over-year, adjusted improved also of

in XXXX, we With QX was with grow to from represented million priorities an average mobile has four highest by introduction our mobile in of X our significant game increased been DAU Words and Zynga's and Poker. quarter of million QX increase audience continued With CSRX average XX% audience XXXX, Friends year-over-year. live in in performance Zynga's driven One strength anchored strategic new million by QX XXXX XXXX XX Zynga significantly past Average our the its bookings services a up mobile year-over-year. also strongest and up Friends, This with from performance XX in years. XX% revenue Starting XX delivered in year-over-year mobile average DAU eight-year DAU million XX history, franchise's mobile QX QX MAUs and with XX% we quarterly up in Words and to mobile QX bookings of are revenue year-over-year. XX% to up

X introduction also the game With Following number Lightning successful of new boosts engagement a Friends potential game rankings the launch and the Challenge monetization number introduced like app Words game Round, in the the in one game increased new features robust App Store. November, of the achieved the which expand free The the and and Solo of economy. through in-game one more and free helped

for Store, the us. reality U.S. a year-over-year. innovative Fast year year-over-year racing with releases up ARKit. event, & App up by game to experience forever augmented QX we and top bookings in for number and were strong and performance new CSRX the mode a the CSRX, new to players revenue Furious of an has XX% driven established the Relay finale continues Turning new ended XX% results a These including successful game its one number the Apple's be as grossing leveraging franchise

past performance This mobile XX-year and in Zynga reached Poker, Moving XX% mobile particularly and franchise year anniversary one was strong QX bookings its a was up year-over-year Poker, XX% were delivered revenue as year-over-year. improved bookings. continued to mobile XXXX for up the in as mobile driven marked Zynga, was highs mobile we year such by and and for player as a engagement new revenue pivotal Challenges saw all-time Leagues. This bold forever than our to from face and the beats the was headwinds sharpened focus up primarily our offset performance $XXX.X bookings we mobile our franchises delivering was of our XX% year-over-year. and best leading XXXX, top in $XXX.X XX% web older company more mobile game since by as position momentum a operating publisher our year-over-year This and model. total games. performance mobile up of driven continue revenue which line This and of strengthened million, million, popular

As million versus of $XX.X $XXX.X XXXX. profitable in first efforts up XXXX, our a delivered XXXX of we million, since income result our year and net

up mobile revenue are strategy grow that studio helped prioritize goals. margin and align live to grow they game opportunities development to of strengthened past near-term These our our and Solitaire to with gives in card casual Poker, mobile QX. our audience in XXXX, or was combination Our accretive year-over-year year-over-year pay QX year continued Titles portfolio XX% Zynga and online adding by total Peak's year bookings of revenue acquisitions mobile bookings our year-over-year. also XX% in our Solitaire up up two made games our Istanbul talent Games' XX% casual a and up user The the with game XX% our They Mobile world's acquisitions the with mobile with represented Peak XX% over pay now revenue games. Harpan's of growth bookings a franchises bookings. mobile our also high-quality mobile total were track revenue and largest and card user card represented year-over-year. This XX% services and In story Zynga proven we of record. casual team

to later our year execution and goals and grow performance margin gives in ability us year. the Our over company our achieve the near-term this last confidence

to is grow look to we our As future, ways. four in the strategy Zynga

building in emerging by technologies; mobile games by services; by our forth, opportunities enhance our by and with will that second, the exploring potential. forever third, creating live of new First, new delivering investing M&A growth goal in franchises; growth

approach innovative beats. enhanced last into We've franchises forever our grown bold seen we'll strongest as history. First, over and our we've services years, focus live mobile to this pay two the continue company portfolio on off through the in growing

to with Our is designed players, our franchises. bold deepen bring existing players players strategy our engagement new to beat back attract lapsed and

Zynga, to new and engaging enhance delivering the proved CSRX, For licenses systems new new compelling in Fast such a and that strategic with bold & Recently authentic more partnerships global Furious licenses beats we used fans player announce include And and experience. features, in the as the multi-year a how be can pleased content World gaming name experience. approach entered to the similar with into in-game, WPT now bring premiere Poker. tournaments. in that We're Poker into we've Zynga today, taking we're and a free-to-play Zynga partnership the experience televised for Tour, to international, entertainment Poker

the WPT-themed to experience. tournaments authentic an Poker in second way a Zynga new competitive all to half expect delivering and introduce XXXX, We our players tournament of to enjoy

be building Second, new new with of growth we'll games creating goal the forever by also pursuing franchises.

properties licenses appeal. combines high brands, Our approach new development intellectual global strategic game reinvigorated sequels, potential to new with game teams with Zynga and strong

Action We Social Invest have categories. and Casual, games four Strategy, development Casino. in in Express

for and soft quality have ensure hits and potential engineer We're launch rigorously the over long-term engagement they right games forever us. the test to to tuning to have is goal to our franchises Our new new doing in beginning soft launch or these of and in and feedback results, in titles we continuing player to half on expect based some and, beyond. the of all into XXXX quantity second and launch XXXX categories be

and Facebook monetization We experiences platforms grow the social believe among potential expect mobile year that franchises, don't a streaming our Games, world. will to this particularly will We reshape the growth. Apple aggressively in fastest drive that chat XXXX. gaming We're platform believe continue growing Words of have gaming. drive will impact year, is platform, emerging mobile and services, largest and gaming in chat, iMessage, chat out new the like in we mobile the proven as social innovation, of Third, audience, the virtual like investing create location-based our but bring With build and phase augmented long-term our accessibility to because of reality next reality, mobile to and its we Instant XG, Friends technologies nature platform others, chat meaningful to to audience. This such

sheet enhance our will intend the of cash we use to that explore potential. strength balance positive flow and from our Finally, growth opportunities operations M&A to

guidance. that our Our further strategic so results near-term our to capabilities to to accretive platforms. like franchises and out bring compelling emerging With priorities on that the QX call disciplined to teams to services, create goals. are prioritizing with goal can live turn take a is that mobile our talented that, approach margin and continue franchises XXXX We'll QX M&A into discuss build I'd over to and align our Ger opportunities to he our new forever grow Zynga

Gerard Griffin

another Thanks, a Frank. management. top line We excellent delivered and strong by in driven quarter performance effective QX cost

and were release guidance. revenue revenue was The year $X revenue guidance in our Bookings million up over exceeded the up bookings $XXX.X year. million guidance million our in $XXX.X is $X.X XX% million. over versus million, million bookings Our comprised or XX% both deferred of ahead and of which change $XX.X Revenue year million, and net million our was $XX.X our change of a guidance and $XX.X deferred of net ahead $XX.X of net a release or year. of

Words driven by With expected Games' advertising X better card launch partial in contribution studio. and game from (XX:XX:XX) was Our casual month Friends acquisition overdelivery from results our the a than of Peak the quarter

million, XX% the down of operating year. year, representing expenses Non-GAAP based from prior year down QX bookings prior our over revenue, from prior were $XX.X over million, to up bookings of XX% expenses XX% representing down was year, operating revenue the down revenue X% year, representing XX% year. of revenue, of Turning of year down operating in were XX% in the XX% expenses, $XXX million, year. X% over from $XXX.X Stock in X% compensation GAAP year of

in All of with improvement line of of contributed guidance year. net over to year income million an $XX.X and our broadly $XX.X million, this

margins foundation more we guidance release continue was which to and XXXX improved and million flow make over year above a up year. EBITDA, with in deferred $XX.X term. generated future our line million of of includes stronger million. adjusted $XX.X as $X.X long $XX.X million We operating peers the end achieving million, in million a the towards much progress down over Our We $XX.X by over was goals This with margin cash the year. year revenue for XXXX net $X.X our our ended by

balance our XX% acquiring use we year average million of worth accretive margin cash portfolio flow, ago. the over talented our in million $XXX and to year stock year acquisitions approximately we of a purchased cash Turning up operating card to games growth This buyback series studio $XX our sheet, a $XXX and million of casual a cash to that a generated our price of accretive primary respect at million year buybacks. was $XXX with during an With $XXX are The year, investments we down from $X.XX share million, and year. ended short-term share. of per We spent of program, and the goals.

million We remaining have existing in authorization. our $XX

the cash our We management value Francisco us building. optimization and through further an also execute headquarters, effective of more assets total our long-term XX% San of to enhanced lease core on the which our additional enabled of

with Before I get you guidance, share to I like themes. XXXX some to fiscal QX would

will be engagement. to in invest services, we bold our in by beats continue performance driven as XXXX live aimed enhancing financial at Our player predominantly

will games new in have our in year emerging beyond. and the technologies more of and during on growth an mobile investments XXXX impact Our

Peak moderate the our expect we growth in older bookings card in low-double full our declines year bookings. casual mobile driven by games revenue games. in our studio live Games' mobile digit contribution and growth should Within the offset We from services, expect mobile our

our our decline deliver experienced second operating weighted We're have to of live expect what approach line and in bookings. continue going our Overall, more seasonality of than level disciplined beats. expect our and be to half the revenue should live model. the to We to the towards XX% bold and a we web a performance top cadence service of year managing to to similar by our at XXXX, services we've influenced

launches. We emerging expect from continued low the expenses with year in level of growth variable in by live should technologies our operating savings and investment services, spend influenced largely turnaround be and game and live with single-digit funded primary actions services, XXXX. game our by phasing development in mobile our our the the investments Marketing this of performance of timing new the new

the us We confidence this the year near-term company grow expect operating to and to gives goals said, our and All over in flow our ability cash achieve year. grow later year our execution last performance year. over our

guidance million million of EBITDA as and million follows. our net Revenue QX increase $XX $XXX revenue net million, million. of Turning $XX deferred is $X and of and in loss bookings adjusted $XXX our to QX of guidance, of

you declines as typical additional and assessing delivered in our seasonality. QX higher factors anticipate sequential FY yields year versus to we guidance advertising include. advertising in Some the QX despite grow due yields year to consider should We XXXX over normalize

be We expect first Dawn bookings year its worldwide full year Titans compared over down quarter to of post as launch. to

our In the company We business expect in spend R&D. with have margins that be we mobile operating history. comparable year. by be expenses summary, improved offset savings significantly portfolio in up on and the QX by services, in will driven We the marketing our XXXX starting primarily to to strongest live our slightly of prior are anticipate higher the fundamentals gross

We And with of lie we're to to excited your opportunities be the happy questions. us. about ahead that, take continue that

Operator

question come Jefferies. you. And O'Shea from the of Thank our first will Tim line with

line Your open. now is

Timothy O'Shea

and my Hi thank Yes. you for question. taking

trend if maybe in then, revenues And so, specifically So user profile with the more maybe Words might profit with to early acquisition? plan aggressive correct on Friends, Is XXXX? acquiring how you like we we a like launch? think this, understand around step-up users heading be us should just about of Friends, is a quarter. the the you launch after help Words for should game looks nice expect second, it can terms And with or ad this into expect

as wondering Just or entirety how contribute of mentioned to talk in a through results you on letter, just rollover Thanks. this deal you item. of just the Friends (XX:XX:XX) could And the this the hoping XXXX ad that had network if much wondering holiday deal line flow in just that. the could well? And

Frank D. Gibeau

the as well. plan Ger for launch aspects first Frank. Friends of I The multiple included mix. It's and in Words question. With Tim. couple, Thanks take your come Hi, I'll will think his comments with marketing the X

and to in sequel, mainly focused aware new and product out we sequel the getting with So existing X them had to on Words the Friends that a be an give out the opportunity transition bringing that. franchise all to users to

we we're all the Friends immediately to to to a at at franchise, (XX:XX:XX) of aware money XXXX. through increasing old over so there's of heavy then and And campaign, do amongst then little who out of in initial players. brand terms how and but bit a the appealing to really strategy, have look progress Words we reactivate over brand start that a marketing players the in of acquisition broader, look year wasn't game. people very So to we existing get a really the paid lapsed base as is look bringing years did of at players eight-year we year an played terms With started where we'll a third because lot segment going it in stopped start casual It's new

we so things about Words were of was backwards With Words to separated. X one that didn't very designing to or With that get was compatible conscious the segregated in it sure new the Friends that make So community Friends

the a overriding you're able own users in philosophy. them new games the play their game – the right was letting both So to was to for that really across the time and transition in

techniques QX when and players going So spend they accelerate when new do where into themselves. those acquire of how present XXXX, UA look to we sorry, the see lapsed advantage service And we invest evolves type beyond we'll we of organic product it back in, use QX and or forward a players to inside of lot opportunities take and in the – and at fiscal perhaps that. opportunities to

Gerard Griffin

can it, very kind launch. next more don't were able fan, Yeah, were saw at around iteration about – players like a very existing we manage They in be that rates terms if way Super this that we launch networks, terms will, We against forever next but XXXX, we our we the as in, new Tim, expect return And that the sustain that's into it'll into see, franchise With spend expect ad the it's the we of able at deals in in normalized. into of the more guess, with do and networks we the ads. another Friends the than terms multi-quarter or to time Super Words Again, of granted if XXXX. fan title going throughout year. Bowl year, our through spend, performance yield increase with Bowl of players the in some the advertising transitioning said, the just of audience ad version as we excited to and look Frank investment, football of bringing looking back could brand specifically, I'm be we one and soccer terms help I that new terms the to and you our we return. expect a in will of advertising yields achieve lock obviously, this players high latest UA lapsed to of we on And in a

see So over to we return that expect on time. a

Timothy O'Shea

quarter. Thanks on and congrats the

Gerard Griffin

you. Thank

Frank D. Gibeau

sir. you, Thank

Operator

Thank the come Eric you. with from UBS. next question And Sheridan will

is line now Your open.

Eric J. Sheridan

internally what better those marketing ahead? out you or of how driving still at? commentary, services you need they're little question. and parts. one intensity understand want And in guys the are XXXX second, the live be penetration guys. on sort what types going about the marketing do of part services Internally directed that positioning broadly you just Thanks to services live see as bit taking investments on investments around live for think I live to called a to the Gerard, is, the Maybe to positioned, Thanks of are we capitalize two feel services, how on make you organization

Frank D. Gibeau

Eric. Thanks, services state Zynga. of I'll live with inside the start

methodically first this Zynga, was If in and in on where coming tremendous that games and build engagement we players process what has science into at and look games, moments you go team the really would new and us a levels? repeatable very were our back the product with to allow management. history the to were a to start existing forever Zynga focus at to interacting that system how data wanted were franchises

needed the that really and with capability, we process we when robust organization. all it unify and couple company to came across a saw so, more And a we of kind in do what was development and production

side So development try we've side much in that the we we services can a production more focused predictable Right long-term at more look been aspect quarter planning what the what it, far we then up, out look look investing complete of each post plan to underneath actually those on of that, multi-quarter product management, and a And understanding at. call goals how bold beat live and these. we now, full marketing, and are go we look forward we be mortem so we'll around much science, data of as and set we and metrics finish different and see will a in-game it's and what and something and unfold for to learned.

improve together, for with of this review just a I live happy can operating out first I – meeting we've think we But services the of to do few we've been it every the have, So new quarters and team than we you early we more this now tell in parts after results running ideas. coming or that put things find management we we're seen.

but believe over competitive and that in the live confident mean long on can we're into see very going we we we're and the to XXXX back XXXX. developing. something can company a it be services we the we in process is be Zynga we're that pulling the We be this believe we're develop results XXXX, going advantage and half starting at of going to doesn't it's early it second that that term to to grow approach that So the of on and improve continuously a that

services, used Fast and and more we're I per Poker where that. CSR to going use example ideas & fact, and In drive like used to WPT we Furious in concepts got we've the live

Gerard Griffin

Eric, in terms services, live of multifaceted. the our marketing against it's approach

where team channels other bring very it's a team to would and other acquisition addition given our When to you user say, think talented into large users acquisition, user continue in and franchise, With we that We there. is, user lapsed and spend marketing to I Friends, have the effective had channels acquisition media audience whether look franchise user with we'll classic to gaming we classic games, what money and did Words for index or about outlets. there on acquisition marry history like in something we've the into (XX:XX:XX) the with brand brand and

about of space to our obviously, Another look Poker partnership franchise, we'll multifaceted. that outlined enthusiasts operating channels and us we Zynga the and opportunity leverage within will as model. facet, to so their the to our World promote the Poker I Overall, think be into if their continue with to terms look you Tour, and it, the at poker going what in as give at Frank it's manage franchise it in

operating portfolio I'm to leverage marketing, Our balancing more aim XX% approach new investor from that increase look over engagement. year, our this continuing are bookings come our this sure operating see users make call, over but investments our across those a from going can to franchises going see users be franchises our drive of and as and leverage. to out to from And and so live come obviously, continue is to letter drive we'll time, to to our we're multifaceted into lapsed and of taking you

Eric J. Sheridan

Okay. Thanks.

Operator

Thank comes Anmuth JPMorgan. line next you. the The question of Douglas with from

is line Your now open.

Dae K. Lee

question. my taking for Thanks Doug. for in Dae is this Hi

Zynga fit the how be we have FarmVille into majority XXXX Friends outlook, XXXX of for appeared of main XXXX Words Should CSRX, With Dawn does like I now. from come Titans, that to you right growth the to pillars And three expect the example, Just services franchises? of or guys three on Poker, story? the mean, live those

Gerard Griffin

slots business, on horses bookings much (XX:XX:XX) been investment go opposed our for quality just we old your as whatever expect had our ones, very that marketing has to we grow get on in to optimizing when and refocusing and you larger bookings Listen, think in are to Yeah. adage franchises, they like focus always price. life and you forever the focusing do fast about faster slots previous the to the the our an

live we're and cards executing growth Peak casual say, help our And together, of throughout obviously, So I the Games year. of Ultimately don't growth, we the will expect but of going of Dawn we grow expect our mobile portfolio of a and bold some will that the the we the contributions plus, see of all We drive in in beats will coming kind business sort do those is headwinds offset Dawn we're lot through still facing out core transition. get mobile. positive contributions that slots overall. its dependent Titans that to still all get Dawn. we of what in as be services from on growth for and web

Dae K. Lee

Okay. as the a of I line beats well? first And weighted, as year half should throughout back then of half about think follow-up, the guess, cadence bold and guys then, we XXXX mentioned how being in top the growth you

Gerard Griffin

the second integration year. little where There beats first the Yeah, it's bold be in by to a of there's coming about a franchise. bit half. obviously talked the major differ half going will We Poker in

going title. depend it's is, by to I would what say So

to we second an at the first there's more year cadence Our is the in impact that going of as overall year. be than look assessment the

of of second gate sort coming a see half little you'll lighter we're the So obviously the year. of in out the than

Dae K. Lee

it. Got Thank you.

Operator

Nowak Thank from Brian Morgan of you. The line the comes question Stanley. next with

now is line Your open.

Brian Nowak

my taking questions. I Thanks have for two.

Friends, new to But how I you starting for little of way and timing a about and think the throughout one, the about the think new XXXX, still managing the IP into in-game come? first we the titles and to your Thanks. XXXX show launch the new early. is small think number guidance? of of Words in to maybe the How guidance expecting Words you current the about the – in-game monetization, and to expectations still one, in Friends balancing go in for should monetization about second potential Then bit four to curious potential just and beyond? are the With to IP With The think, new and just IP titles

Frank D. Gibeau

Hi, in in the wanted Words compete the and of wanted understand they achievements actually lot the from they Brian, Frank. start they time one I spent play, innovation X more. could to and With soft year this we as well testing, the to players team with it's of solo new launch the want Friends a features, with as that ways heard start a we show lot and play more was persona, how start to they their things how understand advance to can off game to

you allow new that hindsight of ability or little in you things like give we would also coin maybe bit even to the ways boosts, compete a so, that that and word of give was to economy a the would have one radar And the play. built team to matchmaking out

see of very feedback a lot new attributes interaction, player and lot adding So we've with they these to been them. new aspects a how and of player these carefully like

be always and positive a player And to to either that With very we social start we're more response. play to will patterns, so far, And available getting things that items more of these see players as more add you'll to It'll and features some new inside orient that's be them for to we'll experience ourselves the enhance able Words towards. Friends. inside win be kind that and first, purchase what they of PvP game the or depth

a people love. and brand a great great that really We have product

that's actually to test from about way. we'll so, thorough it's new new with gaming able of go be and on players real them a things. types advantage very very really why focus the we go question where having robust new in to things a rigorous get mobile out can and in responses soft to – and why launches, introduce our relates And real titles, with that's ideas, these features, new And and carefully we as is how it next

So development we next one we it's from about things engagement. an a – don't quarter the Friends, one we that's timeline from With perspective, our but to go that Words of really those just – and put exciting creative player the thinking inside it's on, the

titles, multifaceted, teams On I games, long-term to new using grow to well as grow approach and over is new and like in – the there for in as new as is forever franchises, the talent. M&A mobile, live new look platforms services, build mentioned, the chat invest Zynga

is development takes game of new mobile four. games really mobile a time to is build pretty marketplace bringing studio to get market able pretty it's market. your of to competitive them It and game tough. of bring rewarding pillar successful second The a into one, though one The the to is, those rich position to and most be the

to testing got you've experience. to chance and to games world-class mobile right, you be organized have make the talent, great than strategy a average most married be got to then they You've to got got to they have that than better and a right go-to-market idea have sure

experience positives. embarked And last on the over a an it's that year that we've seen and we've been so, been of lot

the as those to to more games. we getting our continue we on to those color launches in little give Casino, largely on categories all Action focusing Social time so, year to new the our that it'll give when from Casual, categories. really the perspective, about We're unfolds. call, going that on bit an we're of of started and into do Express games This talked release. Invest last soft a going in, to then, you successful And idea we're there's active be and four going And Strategy, it's development

windows, and the we're we're that And soft XXXX anticipating at the and product and going beyond to slate. early the not there, look of on working the so, that launch some in we're to we're we're second of stopping half anticipating as games games to schedules title XXXX, part launch continue already into into we XXXX launch

back, brands that be before. this little so bringing you Zynga then more sequels a is and So, could never that's CSRX could want on original color that to like licenses, and heard (XX:XX:XX) a multi-year be did a to ideas, have bring it those Friends, was brands big bit stuff slate Words such or I seen give right that it could just was (XX:XX:XX) be you've it could it a based it's we that market sequel, strategic be with we slate, texture

Ger So helps give with a that in more detail. more. I to jump little bit you hope wants a little to bit

Gerard Griffin

business, we're our those as up titles soft them to not thinking of engagement we to when say what console worldwide XXXX new in for The a games us – year, is on market we bookings first a turn not of What gave for it metrics. the the this I soft do based have metrics, be would you we year, more you beyond. second and these to soft the we're about good XX% bad Frank and free that launch player from going is where important feel some XX% player how see are launch few an It's play you and giving success. say going thing, clear, is, get market metrics to that you ultimately, in that in as indicating of and the relates months. you feel see the But about, grow a the and would best guidance and in these of Yeah. into we're the color is, title this in games XXXX launch. We other on the will in or model to launch in into half going of live. thing chance you only these some all said, to hands a But through of the come initially I way to then, turn to be about launch. going our influence good a in games That's when plus that should and for we're majority, bookings essentially up think is themes XX%, to bring more

there. a (XX:XX:XX) about make in out not to it tick we get door game to it's players' box, right sure hands the pushing grow and it's So from them the

Brian Nowak

Great, thanks.

Operator

you. Post of with comes line question And Lynch. the America from Thank next Merrill Bank the Justin of

Your is open. line now

Justin Post

the acquisition Peak acquisition? first going, bit impact Could about maybe a how games talk or Thanks. then, audience big payers little about year? like that payers revenue will thinking in anything whole you or will the quarter contribution you you. ad are or any a how is metrics, Thank be the or the the (XX:XX:XX) And there from have

Gerard Griffin

rest seven team the (XX:XX:XX). we integrated of acquisition kind well the a integrated with and We have closed in unit, X years comfortable deal, everything in when in Thinking this of in been team, the to and over of card somewhere times strengths that fairly that Yeah. announced revenue. themselves, we're the sort XXXX, poker is in It's they interaction so X team. between between I are you look well. for when – terms of through integrating a midway of They've been obviously their been this their together as well December, that they're and these There's division. times is indicated casual the our process of lot going a contribution terms the at acquisitions, team

So I one the said this middle. in somewhere was

you're about guidance next we'll contribution I that's good They're bookings margin if They're our contribution obviously in year, give short-term accretive. see. So terms above highly goals. you a probably to of the can thinking

see feeling a it's drag we're us now, It at – as that what – mitigate, our we right as the call, our year. older would XXXX, So actually in contributor games. helping nice to we into mobile look (XX:XX:XX) services it's it from I live

live into at end services. Peak that from QX perspective, and right of well a new essentially the our was mobile see as – So I is speak now we launch integrated

Justin Post

Okay. Thank you.

Operator

of Creutz the from line question And the you. with comes Doug next Thank Cowen.

Your is open. line now

Doug Creutz

Thanks.

your say when operation? make from (XX:XX:XX) of services, equivalent are bookings that so XX% understand you Just to I are bookings this, is XX% your coming I of coming saying that in already live that games sure from are

Gerard Griffin

XX% plus.

Doug Creutz

Okay.

to releases less XXXX? way of will X% be is, in bookings than another new from say So our it

Gerard Griffin

less some we'll have and the will obviously on be booking side even And it. – very of small given Yeah. contribution, they a marketing and against overhead

is year the So, of driven year the is financial driven the – live. fundamentally by performance

Doug Creutz

Great. Okay. you. Thank

Operator

next the Rich And you. comes question with the Greenfield from of line Thank BTIG.

is now open. Your line

Richard Greenfield

Hi, Frank.

Just a question. philosophical

strategies wondering acquire three of I of to go, – over You don't Are expect well, look at we your Zynga I that the acquisitions. the us being that strengthen this type this especially in there, fold-in, would that many. companies And thinking you them next there as mentioned tell out or actually you think the Zynga one the things I or categories? that wondering and – it were about the a an we names make or about being kind of services wish business to of should company year acquisition strengthen you you – God! even – of actually also easy overall want core. there should kind of doesn't to how not just is live was how be key overall as do that you building today category it and verticals growing but are that kind do the

Frank D. Gibeau

Rich. Yeah,

the of they and start by team little joining we the about with affinity Zynga. me at. start leadership Let things have look bit always the and that that quality with a talking cultural We

take acquisition, shareholder the to to want have maximize have where with perfect always to company value. You we're trying alignment any

culture. leadership, at we looking by start look talent. We at team, at we look So

if have or We Are existing. bit. changes price that pre-scale also that intellectual they we property see they the to like obviously are at-scale, little to look are or brands a

audience look Do on to grow that at they and we're you adjacent? America them a little Western consciously find in? at our where of we North property? genres are aggressively are and it's presence that intellectual overweighed have look And appealing? shift. those. lends do and at they trying company, into how we that Is look If type it internationally it starting Android? we Would bit itself to Europe so, more also to Can We to our plug something we bring we

very of in about in as the popularity mobile excited the emerging I'm well as So, gaming world Asia.

than we're currently and give broader brands experiencing. finding And will companies interested in of and much so, audience us a ideas we're base that what

platform In ways. addition, Android the is fastest-growing in many mobile

And relative audience. we heavyweight are little terms a on monetization to iOS still our of in so,

or about to platform, that. talked There's might critical coming or of We're be like grown. HTMLX, it's be would that insight potentially yet those I additive help Android so, And earlier, for chat, they're studios that overall (XX:XX:XX) AR not the a technologies mainly lot VR from the mobile and emerging XG. looking inside mobile growth going of to to or to on or whether capability a technologies addition we'd have mass and that see companies some also Zynga, an the a in

it of that currently will we for we're if things the native a those, can So get we business the in into lot traditional some position of where doing of the complement side reside.

to look capabilities at for to on lower ways relates cost we distribution as build in to we of games. So new it terms development tend Overall, look organizations.

great organization the acquisition that think made to important lot a of very try and have And a of do near-term checks boxes lower our myself, our where very there's areas for but that We Peak that a studio something great and impact of expanding into Francisco, board are geographically like to we acquisition that typically in look aim commitment the we've We cost. to out. just here carefully finally, then the San the look talent directors, I system we called at goals. our the at on Ger, That's margin shareholders. accretive And financials. our that's I

We our will stage lot opportunities to and And in long committed want sure going that that's done mobile. has we M&A stay this to make evolve we a of as mind. at that, term, that over development in there is be company's the to of

places a it's world. ideas a in global consolidation of and far been lot popping so talent There's far, over but in of I industry from a think So, the all new always up. marketplace. kinds lot that of it's different there's There's

area and be. a to exciting it's rich really So,

Richard Greenfield

you're Peak think help like, round would strong the based looking what And just was based building? there Are that Zynga it a maybe is acquisition just to little today further obviously studio. strategically to a out just bit in card be push about card that not you verticals make if sense a categories, in – would where and doesn't play or game

Frank D. Gibeau

of tremendous And us categories. think in the there's of I still each at look for growth We a Casino. Social amount

them I Casual, think Express. for us of actually; of in lot there a is growth all Invest

And company really the the category; as worked in ranked global to in then be basis. Action think Invest popularity top a start a really PvP especially Strategy we see or good we're the in is one fifth should games on I two. Express you category,

set really is and new growth take whole don't a capability we does So, lot still to M&A, expertise of and that want centers too because how growth our a to in away we're in looking where of I the meetings. we're much, take it But categories considering we far at very much skill too about get are, open-minded in, that think there. from stray

Richard Greenfield

answering for it. much very you Thank

Operator

you. line from the Thank And next question the Michael Olson Piper come will Jaffray. of with

line open. now Your is

Michael Olson

publishers to and rising And also of console term, see other have longer then seen sorry, business, is you the thinking point? in where could hitting I'm achieve margin the profile how XX% has good anything Hey, letter. on overall changed other companies Thanks. some some you margins in you're past? the at kinds afternoon. in still of levels But in this mobile XXXX, about the of are where what the

Gerard Griffin

in revenue. in our near-term remarks, of goals we're letter deferred to which excluding focus of and We the on did delivering continuing EBITDA is our impact XX% our margin bookings; stated obviously opening EBITDA the

sustain from look we sometime our that, into there. then XX% is to and XXXX, break the As beyond in aim grow

I'll when net a we talk we're talking opposed about The of you, number. XX% it a other gross about remind mobile as thing number mobile to

closer to to comparing this XX% it's So our of you're peers. if some

number of important. Obviously, of XX%, there XX% is you to from get As a there. XX% scale to is getting think ways to

base into forever new current a leveraging existing whether our our markets, audience it's chat to in franchises growing like interesting so, them to and distribution base, larger new emerging audience out opportunity. is markets technologies deeper broaden a and or And an platforms

through you you we own breakout much. to banking the One our will development help. bookings future reaching It in I say thing careful on will M&A, go helps level we'll really thank leverage, see that through or earnings would IP through a the hit. phases game bets But the even our calls, of level previous give But said final against right we're sure and technologies emerging very picking change important. to ourselves the of additional of level as dynamic. hit. growth we're can We're maintaining in I've if title bringing of just new not focus not on to is, this get very addition a that really daily live, new breakout In turnaround The as can making one, going get investment the a we we're a if that help. all right operating of but But say is into right phase, ahead us.

Michael Olson

you. Thank

Operator

Thank you. Goldman Sachs. And the with the of next line comes from Chris question Merwin

line Your is now open.

Christopher Merwin

Okay. you. Thank

So just I want (XX:XX:XX) the guidance.

$XX like XX% $X I bookings ex-Peak XXXX, digit the for million. (XX:XX:XX). like same if thing implies the IP. back to are mid-single So bookings the out think something of for mentioned it guidance, the from the works to I do core growth I a little And a I down do get in if I it And math I of acquisition, quarter. that on million core bit, Games that out about existing Peak are the XXXX more coming If you guess

the organic you I (XX:XX:XX) growth of the to you. Titans, sort be the know XQ XQ I going full Thank So, advertising of you versus mentioned some XXXX? and but headwinds in just Dawn think that from year there's square curious how in

Gerard Griffin

Yeah.

of acquisition seeing if some from Peak essentially think older about the in the the Peak, outlined us themes, helped you I headwinds mobile. mitigate As we're

addressing we obviously will can similar you expect declines level our we it's approximately do $XX that, million. what to a that, be of but And on XXXX. in web math to saw which addition In we're the

few low of – grow our to that look at looking double-digit outside you're at core factors. is So expect when a we still mobile, our the that, we When core there QX, in range.

quarter really longer. strong momentum. think but year, poker go my very coming for same look at Friends, sort through live new a lot When as have were is with have is service this I dictionary in don't also to that games much. With last our core you're it their that off where – lives, have a healthy. of of we had we some we But of scenario this portfolio Titans. about time portfolio Ireland you into them level of mobile year we those a launch we Outside you year-over-year, the are a a Words and phenomenal; yes, a healthy. year, portfolio over year use They're you dealing well don't that of that also really that you But word though, added all a If performance from Dawn

the saw So of XXXX we growth XXXX. level to don't XXXX we XXXX, see expect to from in to same going

Christopher Merwin

Okay. Thanks, Ger.

Operator

will The line the with come you. next Thank Mike from question Hickey of Benchmark.

line Your open. is now

Mike Hickey

great guidance? you in a taking for it, But close I it didn't Can for key it. hear on you maybe Was the Thanks think Hey, questions. said guys. you One, or out quarter. that my said see to contribution I in break us? Congrats QX, in mid-December. it your

Frank D. Gibeau

in give scheme We it overall coming bigger deals the performance to around fairly the had X. from but advertising Friends didn't was we better-than-expected the a peak minor that, the of on quarter. Words quarter With The obviously from was breakout the

Mike Hickey

Okay.

(XX:XX:XX) business correct? core your So

Frank D. Gibeau

Yes.

Mike Hickey

you. Thank Okay.

Gerard Griffin

peak quarter. (XX:XX:XX) you next if think listen to – to about good you on thinking got the caller, you're about year last If steer a how by

Mike Hickey

I Fair to clarify. you. Thank enough. just Yeah. wanted

but new to looking the pretty guess, games, feel the about on development, but think now clearly important focus sort are you a here, guys guys passionate been eventually me on your Obviously, of I when game only solid live when I no a or for an of mobile, question or of it's philosophical think But seemed Zynga important. second existing data science. OpEx in way services you that's you question, of science that's growth through not a have culture to the of your lost success optimization, ingredient sort of a into turnaround The sort focused bridge question. And old, came of it to games. sort worked and Obviously, ingredient. sort is

while, for for important M&A now, this has been that, years, people launches, many new to talent like important Zynga I'd attracting to and that yourselves was hit to hear wanted of internally? getting changed you've in just a also terms game culture but culture a success while how sort And terms retention place you. think I creating important. getting to And you or guess so maybe and that of that so, the work now finding in been of is in clearly changed, which Thank not in has talent very a retaining (XX:XX:XX) and in those a breakout

Frank D. Gibeau

it's culture, The the building discussion of days. culture, the related that the and want for services, time, honestly it's – and the the Thanks It's what we Mike. the be and consumes to one company known culture of them. of all as question, about most companies quality with and the philosophical out of development game starts it creates directly great to products us talent

grows a value in all grow just story that day simple, complicated, little services the that and betting in, position then understanding focused on company live the is if attacking got is growth of a concurrently, you profitably from really but and time that's actually and bit simple we've OpEx live a we're it way new what title And a company not option together mix a really happen where the been off the titles. there. nice it the of out takes of So, time and line, can We've it comes keep in on we building been get and you on getting and putting over model, you services making in new the one. it

as to a more the many us games a in out, on more that excellence lot the So of available needed in art made what ideas. and had of talent here needed development. to to was of And across we was it, to many flushed focused. capability be be science company. talent were pockets that science of was there the much beyond but development finally game it We way be side Zynga predictable, diluted had product data got needed too it the phenomenal too management, it A

that Having has the paying you to want but engineers. innovative great, manner, So while the journey organized things, of like new you invest around for just you live other importantly really been in ops that's start great first attract to interesting get great problems the studio, start part our platforms as invest and new some in chat an because long the you also gets bills term and play games, have to of the talent. how an solve

started started this and to science stages. of together much across organization. our better recruiting opportunities. So inside Zynga about of a how the we've I been we And think now. put art about wanted up We've a of giving we to people into new about leaders feel lot been multiple and think the we We've that to been leveling Zynga lot balance inside people,

the mixing we've the the that of has. embracing ways Zynga experiences also inside in but Zynga industry, advantages based a and been parts really we've and in so, on relishing other had it's new And of lot the talent

battles didn't the started about we a quite call recruiting when get a winning getting we've out seen acquisitions, culture first more now before. more, lot the lot a So, and interest. going And on road backs, talking We're change of than bit. we we're ever

anecdotal organization. you little in absolutely So is critical it show especially you Momentum a little things, creative in responses start that turnaround, a build momentum. does as to

keeping on that building focus. and perspective, our also going has momentum generating and So a from it been it core

really tuning innovation the in to over the the of and good this you of aspects excited a one the we this look many we've quality starting how on got But things So, quantity, it is, ship games year. we is games of it. quarter. new some – to ship in other It it's this And to we're game? at see in that second the been over half very not again, start

AR. reveal that to the stuff discipline talk lot all about great to is, know a and building do we But move very it's that's more to have in more goes of studio as is, also call you resources bear one it's on not need But your push you've traditional have have it's when you stuff the that done when to category, I'd the the are we main funding applications the misses. stuff it have critical as to job on around the can ideas. sharp entertainment games the and and and exciting. work. It's teams you others that of have of to your be us you really technology, about team the doesn't it start chat brought things year to a So, investments Ger innovation of stuff. and only a We And really love new for to on. kind doing, mobile teams seen want that our to to stuff what about higher to value and do

a same little we've couple the over to And relatively we look new, can't we so how you of the the really We to think place clogged bit that a And months last line somewhere terms to of at performance rigor to Does us add was over line. And expense it. we do if when build that the OpEx innovate, see that to sense? as just or a gives gets be but growth, we held opposed the line. our these so, able that we time, where I brought make or invest in through line. start R&D get years, the ahead in of it XX up in last it way R&D then chance terms up in like how kept a we where do we flows in at

Mike Hickey

luck, appreciate Good I color. guys. Frank. Thanks, the

Operator

Consumer Edge Stochel of our from the final will Ray come And you. Thank with line Research. question

Your now line is open.

Raymond L. Stochel

retention your for discuss on you sound any Good metrics or my games afternoon. relative traditional Thanks call. It mobile to your more much like chat so games? you're here. in Can taking engagement investing does

a a and If variance you're details give there's any learning basis really chat or what from Thanks. on that, about overall data if you of on just could perspective? game-by-game a major kind

Gerard Griffin

making. of It's lot now, point I what from different of investments things with those experimenting very impact to out a on we're Right see days MAUs that we're DAU ideas more the and lot you works. it's see and chat a would early now one really right

super the a DX some front in the focus piece know and vital retention to more funnel like bit stay. of how metrics or actually You're see more of little have carefully games a is player, starting a yet so part game the to versus younger do male early. and the chat on the much you longer engagement because long We sustained more don't it's DX

we're updates velocity and our some of speed key organization. So, and of learnings to into really is important try starting development incorporate these

Raymond L. Stochel

much. so Thanks great. That's

Operator

like turn conference now remarks. to would I Ms. back to you. for Rebecca the Thank closing over Lau,

Rebecca Lau

you, connecting right. our want Sabrino. over earnings and everyone thank coming to call everyone forward today, for to the we joining Thank weeks. look with All We

Operator

Ladies you thank today's in the does participating for and conference. gentlemen, This conclude program.

disconnect. may day. a all Everyone wonderful You have

Zynga (ZNGA) 7 Feb 182017 Q4 Earnings call transcript