ZNGA - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Zynga Third Quarter 2018 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 would now like to introduce your host for today's conference, Ms. of and President Finance. Vice Lau, Investor Corporate Relations Rebecca Ma'am, begin. you may

Rebecca Lau

to and Quarter Joel, you, Zynga's welcome Thank everyone Third Earnings Call.

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

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

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

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

over Now, Frank. call the to I'll turn

Frank D. Gibeau

up record driven up our X% pay. were We bookings advertising XX% Rebecca. million, year-over-year. financial best of results thank Mobile Thanks, and for history, Earnings up $XXX.X in by continued mobile XX% up was X% across mobile you million, QX year-over-year million, our strength achieved mobile of $XXX.X year-over-year. afternoon bookings and mobile revenue We revenue million, and $XXX.X Zynga and Call. in measures, bookings delivered user performance ahead joining $XXX.X guidance Good our revenue of QX key with and year-over-year

year-over-year. the $XX.X operating generated also up XX% cash positive We million of in flow quarter,

to in areas near-term This goal. strategy achievement quarter, of and of investing while live This the margin our as milestone surpassed future our delivered successful turnaround our enhancing Zynga our sharpen operating services execution we reflects for we model, major a growth.

created growing foundation improved on us innovative call, Later layer services excited beats about information to focus for of a of Bros. includes with this Harry Game provide to strong existing we partnerships our live Potter franchises. which and through licensing new bold Interactive and for on new development have are we has Our XXXX HBO experiences Warner player our beyond, for under with Entertainment some the games Thrones. more for on new and the

brand-new delivered by This XX% DAU, mobile First, revenue QX monetization a boosts Friends adoption end-of-summer-themed challenges. increases as an popular solo include looking enjoy user driven optimizations mobile QX, Words daily and events at our challenge more gold feel and look variety performance introduced average fun as quarter, year-over-year well our feature was in moves players and and in of in-game year-over-year. as continued a to teams and our two XX% to up In up detail, updates with network of features. per With pay exceptional bookings new advertising

their feature launched X players game patterns. collect, colors express and board Words to and Friends also the on enables a that Styles, tile customize first themselves Tile We of with variety in With

Porsches. quarter, and Our forward including CSRX launch beats, iconic the a to bold players new of styles continue to into exciting styles over Bugatti gameplay the another their coming adapt and we collection more had everyday these of solid exclusive series look Divo by quarters. a driven

bookings X% While year-over-year, grew year-over-year. was mobile revenue flat mobile

the the CSR cars Legends. Inspired spanning we As in by late QX launch an Classics, CSRX expansion allows are new XXXXs. game race XXXX, impressive a play closes mode to XXXXs and new this restore, legendary called excited from customize players to later to out

ramp to over glory. back classic to cars these collect and Legends bring their them former time expect We players as

quarter. to continued franchise in the the Poker, Zynga to despite challenges Turning perform some

players. X% made down reacquiring QX, matched Facebook recover we and ever, the was platform its best Facebook continued Connect. game last to with changes year-over-year. flat lost revenue are to year-over-year, In from issue bookings contained believe by mobile have players' We mobile the mobile Zynga plan using in additional Poker quarter bookings quarter While quarter, affected log successfully and ability of The that Tour actively which and At a introduced Poker modes game the and player faster-paced, quarters, bold our new the over tournament in-game World engagement end to beat, WPT-themed increased players wide the of events rewards. has to range combines with introduce tournament coming experience competitive we stakes we play worldwide. higher

Gram integration pleased marked quarter we QX its Lastly, of our first are full Games as Zynga into with post-acquisition.

the As to our franchises improved approach new M&A time, and we to over portfolio remain pipeline. services Gram to that ability we've continues surpass portfolio initial our live us of can to and talented excited experiences our past, and forever about particular margin add in our expectations our beats in goal scale our our to meet acquire our in is has in QX. Dragons!. the and Innovative expand to player said teams near-term franchises Merge enabled bold with game

that we we're bookings live compelling profitability coming the to layering established a games services, pipeline over of have to Now and start in years. drive of a excited new strong foundation

with by players is teams new franchises around developing for create the goal games world. combining brands to strategic captivate talented Our that forever

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driven in we're reach area by key the categories, popularity its player a First, existing our tremendous and Match-X investing amongst is base.

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as for reopening. Match-X completing of and launch enjoy sets challenging rebuild positive fun has to grand players famous Soft puzzles Willy its help been chocolate Wonka his customize feedback factory

entertain title steadily new to and coming the quarters. attract the over expect We audiences

We pleased new and the Bros. this game. also to a Harry and about half develop of to publish Match-X launch second agreement are We're a new excited expect licensing Interactive game mobile in partnership with to Entertainment Potter Warner worldwide the XXXX. announce

slated title this HBO development already Thrones Merge the we of half our Within on launch of new as our for second Additionally, actively new a live working including with has of in as is agreement of on Gram multi-product a studio, XXXX. games, which Games franchise already the expansion a game the new new seen branded casual Thrones franchise, leading first to Game licensing the Game XXXX. soft slots to social create Based rights begun and slots we expected release Zynga two of gives a success have games. on are game floors, mobile in casino the of number

are game the first soft games will at anticipate half have release towards of experienced Helsinki history. These one titles to the CityVille XXXX, launch the the For San teams within in FarmVille ability highly We entertained Francisco end XXXX. in based new building Invest/Express, Zynga's both mobile and large renowned of least our with and up. and franchises audiences talented be from ground throughout

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shareholder term. can turn our like further and over the to are confident guidance. profitably that, QX results our discuss over Ger increase ability so QX bookings With to We value in long he I'd that and call the to our grow

Gerard Griffin

record delivered continued Thank We you, near-term by and live margin our driven mobile guidance, our another quarter mobile We and operating our QX of was improvement our for posted in services and Zynga. ahead goal. in revenue achieved results strength Frank. bookings strong leverage.

engagement top player delivery marked strong well and our Our across live as by performance. services as monetization advertising a line was particularly strong a

our with integration full Gram pleased are their We quarter marking with QX post-acquisition. first of Games,

lower-than-expected of increase was prior-year guidance change which a comprised mix net million ahead in games deferred is exceeded Our net million terms models. and year-over-year. was the of or deferred deferred in Bookings bookings revenue both net guidance $XX.X bookings of versus $XX.X and bookings million of $XX.X million $XX.X up $X.X primarily of We revenue million or XX% in revenue $XXX.X X% guidance. of revenue QX $X.X billed ahead million, the million a up year-over-year. million, and of and and of in and The our monetization our $XX million our our had the due $XXX.X in release were net increase guidance Revenue, both to quarter. a

up mobile forever XX% driven now despite with Mobile advertising mobile beat $XX X% Mobile This increased quarter million, quarter including With decreased XX% year-over-year and mobile by XX% our challenges our contribution year-over-year. Sequentially, Mobile Poker increased year-over-year. We for minute million and million and revenue our some This and $XXX.X a strength MAUs mobile revenues XX% in DAUs user to primarily up full-quarter and our XX% bookings. respectively. and line history. million, our particular, quarter. performance or Zynga was in was driven bookings line franchises, performance average represents and delivered $XXX.X was the best softness performed on dynamic of total by X% and MAUs true-ups. while our advertising, mobile, a Friends by Taking by mobile top on Words year-over-year. quarter This mobile bookings Friends was in XX% mobile was XX% up top offset well pay. user onetime mobile history the and $XXX.X performance player advertising down which in anchored primarily from DAUs Zynga some million, up was Games year-over-year Words bookings in in $X.X CSRX, mobile double-click better-than-expected and pay audience. a Zynga's million, represents advertising optimizations, Gram engagement were revenue $XXX.X Our X% QX With in were up X% in total advertising which pay X% user Year-over-year, revenue best some network or year-over-year. respectively. by of

new be games ability in have confidence this with and to We portfolio mobile the market. our our monetization bring trend to player as in coming quarters across continue pleased continue engagement we and to

GAAP of representing than Turning to recent some acquisitions as year. X% year. increase XX% expenses, revenue, year-over-year. was million, in of our $XX.X the of year-over-year, operating up bookings is net of $XX.X income year-over-year million, and game delivered We year. function compensation up XX% versus of the The from of new run year-over-year, $XX.X decline the a million prior up up year-over-year, full down well were a QX representing in revenue $X.X of X% operating expenses in $XXX.X as operating better in in XX% million, million, in representing revenue for from $XXX.X income primarily prior Stock-based ramp X% prior million year operating development were the of expenses guidance costs. net expenses bookings, of rates Non-GAAP X% XX% revenue XX%

in now we XX% EBITDA. quarter. cash quarter, We increase operating note follows: live with short-term very to deferred a the component year-over-year we services million. million. net Our loss decrease up in sequential In revenue, adjusted is and bookings the EBITDA flow variance million variance of million. variance and a $XX $X and We All-in-all, had million, million, which quarter the million investments year-over-year. third in revenue assessing a that component by deferred by change year-over-year was assessing EBITDA investments negative is million of year-over-year of improvement $XXX in increase $XX.X income by $X.X million primarily in flow note of of This $XX in in adjusted variances, of represents year-over-year variances, revenue the please of million adjusted of and the In guidance, And in deferred net was operating ended adjusted cash net of continued in variance QX driven guidance The year-over-year. $XXX short-term $XX $XXX as our that please revenue generated of revenue our and year-over-year generated the net a cash represents driven of leverage. a our mobile in $XX revenue, cash and above $XX and strong $XX.X operating EBITDA. the million year-over-year quarter, the income million negative change and

offset our by bookings declines to some contribution Poker we forever additional and recover to line and in softness We be with services. Some strength challenges. mobile anticipate With Friends to guidance franchises, in QX we our QX by driven similar our to anticipate factors from to QX, Zynga be and to in expect it to consider continues broadly our we as the Within games. our Games include: QX from bookings older continue Words in live in CSRX Gram performance primarily continued Web expect platform be assessing

we dampen and advertising Wonka's game. in launch we of in seasonality some QX previously, in noted additional our optimizations, anticipate which between improvements Candy, an onetime the further we soft This we We expect by in advertising record typical are tune QX, a World the performance month true-ups taking this the QX. week, lift part would will in included driven to had after network quarter. As launching

how Given in to the game we in and Match-X margins operating monetization, and of minimal the the to investment contribute QX the build our bookings due and of marketing. engagement the timing launch nature gradual launch on weigh expect games

with our gross the to primarily with Wonka's development. marketing comparable new We World a in higher expect ramp associated and to in slight our game operating margins of sequentially, cost investments our the Candy be launch QX expenses and increase of due to

a sharpen live reflect turnaround for to-date our results strategy our our services investing in Our successful growth. of enhancing execution to areas model, operating and future while

layer and foundation through Our bold experiences sustainable focus for new beats a player more on existing to franchises. has live growing improved in our our innovative services created us

games over improved I ability to to term. our We and launch the one will and on grow our successfully scale are layer the and how business years. have then bit significantly over more new reflect like to would now moment is of growth to number coming to our they a new profitably little the them. games fundamentals in Priority confident are long take a into

our look to we pipeline to in live services XXXX, start are As we game strong excited onto layering our foundation. new

games your our margins questions. full-year full-year ramp we're employees to a our launches year XXXX will with from addition as against see margin excited With prioritize players, bookings we're expenses benefit how our that XXXX, to a XXXX in operating contribution and on contributions. about primarily these that, delivering benefit. our we from but modestly new uplift To we and These on strategy an in take games, we investments executing close, overall these anticipate deliver marketing happy four-pillar game expect to We investors. as to due weigh growth value XXXX in are bookings XXXX, in rise operating expect We partial development slight new spend realizing spend. in the will to game new to

Operator

you. . Thank

Our question Olson Piper Mike with from first comes Jaffray.

Your open. line now is

Mike J. Olson

afternoon. good questions. I a couple Hey, had pipeline

next compared stuff So to modestly margin pipeline what makes And there's overall op XXXX and sense define the means maybe a on one please? associated year-over-year these it When say you margins weigh have wondering can if that cost in further in interesting a there then down of XXXX just you implying year I is follow-up on op launching for margins will into investments and lot are XXXX, you or modestly those. some weigh of for XXXX.

Gerard Griffin

Ger. is this Yeah,

down XXXX, launches. basis year-on-year As and timing launches from to expect it these XXXX to on a based these marketing of would we against the on percentage obviously overall we investment at the look the be margin

you of a As and that you would we the percentage it see you new can modest you'll bookings launches, when our see as again reduction a but we cadence normal I launches, a guidance on based contribution to and launch into you those back an games, investment as year would initial game come see new from mobile. that my in in you obviously game, a new QX, full-year in is on cycle versus from against EBITDA particular get say, next expect expect see a there the year-over-year, that's into that disproportionate in once apply

Mike J. Olson

then between IP. potential and in sometime titles now commentary pipeline Wars thanks, whenever of like I total Star five nine titles your would those Okay, regarding titles in launch. or new the XXXX Looks for counted right, includes think them be to I up – licensed going to potential is and up the

margin you how balance with how kind or the licensing awareness think IP? brand licensed wondering weigh of just get between from you costs that licensing about versus Thanks. impact do the So IP you

Gerard Griffin

When Yeah, I think about about with Game we licenses little Harry think some a about the of even and have of the mass Star Wars, we've past. kind talking and the IP in brands. those dealing the Willy this bit in talked Wonka Thrones of you market Potter, portfolio, other you're the we're here, are

good. brands Apple, that marketing that very exposure given the spend we're Google, in from et investment of So you an audience, that return attract step We'll believe audiences. a perspective, get large And resonate expect step to sure brand a of we next terms game accessibility working very and terms it to platform going in still and process we well, of awareness audiences. placement entertaining against that think can up lot partners, with make from scale of if you so Obviously, is to but these address about those the can brands get we cetera, our in produce dollars, we those good still the perspective. that terms the in on very

Mike J. Olson

you. Thank

Operator

you. Thank

with from comes Sheridan question UBS. next Eric Our

open. Your line now is

Eric J. Sheridan

QX sure drivers I QX, little in the the contribution titles, revenue of for question. saying to understood key some some standpoint QX-over-QX Thanks of the and ex-Gram. ex-Gram, from that taking to QX of some And were so big two, little number what's you in be then implied there? it headwind pieces maybe a unpack wanted create true-ups the the sense versus that give why the a and they little QX a would us guys. Thanks occurred just advertising make granularity we have bit some back better versus of business much number moving bit around you're the QX to what in a so just What one? such forever of QX dollar what in some in franchises, we the from a can of of would were would just tying

Gerard Griffin

Frank then you we've about some and may progression CSRX. in. start Words think I'll With and chime forever When good in franchisees, the seen Friends

As the with you Poker the by impacted was strong but our quarter. in quarter, as we had ever at was look title – said, Poker, we meaningfully its issues Facebook with that more QX. was portfolio in it a it in best It line experienced

So as QX expectations little bit Poker into our we softer through we a than and being QX. saw go

of the with mobile the live healthy. think is So and fairly on going QX we're live business, being is portfolio service to the seeing obviously live shape very in from to similar web this the right and growth our the older of QX the some I've said service profile when that overall overall is about we business of drags that and past QX the now but there mitigated

second with hit just me Sorry, question Eric, again? could the you

Eric J. Sheridan

will bit versus that. a Just the of the so what just the mechanics true-up around some on understood more we advertising granularity in in little QX repeat business

Gerard Griffin

few a there's things on there. in Yeah, going

continually our were trying the which And we've going the we optimize not those of uplift to economics. to I'm past, some mention one, networks negotiating networks. particular, look deals in in one obviously with to able of said and As we're overall our to

quarter re-negotiation. a benefits an Some just just initial call, We as the from rate. of that natural some was change to, opposed sort of step in I what got run the would

locked our we event had the the in one in had we non-cash ability available of use partners out that technology that actually event also owed advertising can in that a network drive monies that with use a cash, essentially receiving That situation of value instead they we can have of We of to where some had that from cash lieu players. money It's to them use years. elsewhere. a for helps of our been a us wouldn't tools of number communicate that potentially we purchasing

Frank D. Gibeau

The ad, add Words very forward would play. moves we to watch-to-earn dedicate seen is so a Friends They're that inventory number in then only in expanded engaged. from which, Poker. We've watch also if game up WPT to We're know, in in-game of of significantly. thing currency is the players amount we've to good increased the I engagement, that is engagement as and experienced that to of improvements the able DAU seeing keep way continue Inside you've you per some great terms inside on earn With their

So be also that there's to in some proving terms of player core are fundamental games our inside beneficial. engagement shifts

Eric J. Sheridan

Great, thank you.

Operator

And Nowak question with our from Stanley. next comes Brian Morgan

Your line open. now is

Brian Nowak

I questions. taking have the two. for Thanks

how growth? the Just think wondering the should you to think go of XXXX those to pipeline Poker the want you stable can one, Then drive from I long Facebook Any about on franchises? your deceleration, headwind How quantify we bit how about to into second four going the in little of franchises Poker comments the to back a us XXXX. the way continue about bold expecting just was margins, about quarter to headwind you think beats do issues. of lasting current this and ability talk sort material of monetization you you that to back your core forever Are a could Facebook? on

Gerard Griffin

I'll start.

guidance can for we about context you our live more how so think giving give services. on we're First XXXX, call, point is this not I

we bases grow sustain said about that and it if new over both I time. we're services introducing continually said our think and as this, obviously you our relationships, we As player we've so to life when Frank in content relationship and can the have maintain past, features

can a event. features major terms like fairly those be in meaningful of of Some

start in game bookings. pop Some coming beats level into maintaining higher a CSRX, vibrancy level are in bold little some look we mean to necessarily more we a it's of talked them doesn't as bit a of of and with just going But to that QX the of about the get the some of features. QX, part throughout cars Legends, just to as of you're to arrival the access that to of are iconic to of you'll access I'll in to course additional and example, different that cars use but feature an going XXXX, be going have the that trended

we and will a, in on into It's ramp. meaningful a aspects of from end gradual more features So XXXX versus well in look CSRX bold of entertain QX. that The events that's World the beat, as that see we a that at of of with XXXX. off. one sustain the beyond perspective, time into Tour, will Poker obviously players that but it we've terms in the kicked see engage Similarly what you'll and Poker, QX, I call, QX

perspective, and of over that all with the in forever our our a slate and expectations the look our have at engagement of acquisitions going them, it's the in pudding portfolio Dragons!, acquisitions proof Merge Gram updates to in but with of time. the will when those games our the grow from some of of So business, we franchises and we're particular, like we sustain that against mobile players terms be the ultimately recent

Frank D. Gibeau

on detail more Your Facebook poker situation. second little the bit was a question

that the some related and through process experiences what that there of that done players a issues takes to recovery, reacquire we're Connect of to the we've say gone players. essentially in group time, talking Facebook is is platform started time so we've it and then think like organically Unfortunately, same changes Poker. in made what or was And time, lost audience. we players those were further a to than poker been for just Facebook about intervening to a the platform them Connect to period. I'd out earlier some mitigate lose the just impacted inside Connect from paid caused And of that Facebook that shifts because year, impact that's the of the and contain at of beginning. So and when there the recovery we've reacquiring I I'm standpoint and us

you just of a think releasing been back those into like services, one we're have issues bring seeing things you to of I when portfolio issues was the highly service. that live driver major So to we you'll a But With that other. managing not that that percentages. more the have and have more Connect in whereas purchase-based with Friends economy, few it might in-app of the an didn't model deal it PVP, a a the one Words same Poker affect ago The what was hurt CSR and run Connect reason was you're WPT has that weeks it's of folks Facebook into level ad

and you a return as that it, most goal to on little are – little our of on it but to of at here the texture the have into I'd Poker scale, XXXX. we're growth is a of of one of diverse Zynga starts bit that's that say is bit WPT team as proud really I the XXXX think we exit more And to portfolio things that we franchises. as gives a we that's and through So again, Poker

continue as in as XXXX, is we Game of Poker our and And one portfolio With to up continues to Words is of for And what goes layer the starts we that's Harry beauty generation an Potter, that in into intention delivery to CSR along. and a an on quarter when XX% hits overall grow go to Friends have transitioning to live the our excited flat Villes, model air assigning great we're we bookings I also our have at develop bit, Willy So Thrones, games and pocket enter every how think to that profit and that to and we for where and process we're looking and teams franchise going features beat the of this great the the in, push bold tied operating we put we've in XXXX. franchises. that's Wonka, it's new same keep about

Brian Nowak

Great, thanks.

Operator

Thank you.

from comes Sebastian question next with Baird. Our Colin

open. line now Your is

Colin Alan Sebastian

Great, have questions, for taking I thanks two. my

the Match-X genre. able grow to games, mentioned you With the this leverage to base being existing user

to So, or existing this other if some incremental gamers less or I perhaps the I'm from active you be reactivate and wondering largely expect an titles to to other is opportunity a have these follow-up. portfolio users games absorbing from

Frank D. Gibeau

Sure.

up to as we that women do are and talk Social experiences. find players play you these the include Words the willing research, globally. to they're Ville in want and Friends top. as Casino In favorite Match-X their Match-X to and our With right we players, categories XX at If And well general, ready when

that that So, think we are adjacent think they're incremental. opportunities. there We

think bring game. players one different these And potentially new games play maybe getting reactivate as lapsed market in genres. well these think I we also in communicate they'll players I to can to that Zynga as players existing and more

a operates we and network it couple it can complementary So on find of dimensions there a be plans. of growth part and new that a part different very our our future and

Colin Alan Sebastian

market, a acquisition And are if opportunities focusing the these that priority? guess I'm on I and time on Chris or there still are wondering follow-up the questions. still attractive Thanks. Corp. is Dev. more Okay seeing I like in a the and is licensing that have you're team partnerships

Frank D. Gibeau

productive Game franchises, think Harry talked we you few about room them also and over as in box. Early for turnaround helping really licenses. we but that this them in don't When some need of keep to and kind Wars, big is very Corp. that checks last been necessarily right now. to them, potentially bring Dev. team, growth see started busy plans forever our licenses these I it quarters buy Thrones strategic the on they've relates at very in look couple dramatic goal our build Zynga, IP the a licensed for the when portfolio we and of and more a Potter I of Star to

audiences potential from to Dragons, the efficiencies IPs than rich think these really owned storylines, Friends, that universes world. that the product a then a And introduce margin as allow really that team of. the the for production these blend generation licensed with experiences that Zynga while on some nice rulebook well building play a being Merge can nice the might potentially as heard us characters, a gross spells, a organic will spaceships, Words economics blend efficient never I It generates in game game that what we bring somebody's have With come to growth have be that impact, to we of to also and of to marketing as they Villes, IPs able more Poker, the have pick effects, basis nonlicensed up audience on has castles you games focus in the addition more the very standpoint. greater side, build on a opposed and that, have

So, as effectiveness well. there's is R&D production there

about into ideas license those all – think go we when that's So acquiring not. or a

opportunities believe marketplace, there new out of looking that franchises forever talented the in and terms for we are In of still acquisition teams. highly

Colin Alan Sebastian

Frank. Thanks,

Operator

you. Thank

Justin Our comes Post with from Merrill Lynch. next question

now line is open. Your

Justin Post

Great, thank you.

Frank, the acquisitions And quarter. on what how clearly to was Just and of think when wondering or bookings the But think there? that could any that games new if titles all any games help contribution you. out you next do in tradeoff? stand have can with year license contribute framework basis to then you how you're some the costs. kind next about looking makes at that of And license Thank you second, do new help to percentage how and that us a revenues comes some you year much from licensing the with

Frank D. Gibeau

the I'll take last first. question

ways. a high-quality, look start base, player that. and at And and reach look have an experiences. operate we licenses all adds is that some to that we category in game license ability have that these to be the licenses, out the that where the highly-engaging we an I we – existing in to think the of of really to acquire the fundamentally them, looking we And at taking. we're quick as at at not have when One, couple them approach then element expands add-ons sense just a

want proceed that each soft and that's green-light to build fact of with we forever we games them So into And our and enter launch. and Social Match-X these I into intent there the when development market bets, franchises; the are at that of and categories in cases for. us look lot adjust we risk a adjacent that bets can in that Casino very gives management of our think our

values Wars the really marrying we've a with done and NaturalMotion the We of of technology, Dawn nice with that to production complementary quality, that Star world feels Titans. and also think what and taking like fit CSR

So, help and also size. long-term, bookings we be and think that audience these are accretive obviously going to drive

Gerard Griffin

acquired $XXX back I you basis. of you level million the basis. in rate Gram, of from of indicator will terms natural said a then when give rate run contribution that somewhere if a a to the we refer In run what on Back to about XX-month said $XXX the broad I million talking acquisitions,

set expectations stick give when this is still only would operating bought so our to that we guidance them, I Gram stick you to out that So, would that would I as I that the we point. at within

Justin Post

you. thank Great,

Operator

Thank you.

from O'Shea Tim Our next Jefferies. question with comes

line is now Your open.

Timothy O'Shea

thank hi, for so you my Yes, taking question.

users? trends, upfront you mobile incurred update you're an owned the matter game? acquisition aggressively Just to should just strategy is Is can IP to prime how to we be doesn't on profitable or that acquiring market looking licensed or that guys maybe something the if launch needs after launch expense an start it's on and and expect users a to soon be a acquire this large new what you. engine Thank this game a and for today's user You basis seeing done games. guys what's in

Frank D. Gibeau

I'll paid a comes general, more with basis. global it's UA and and and getting competitive forms; In users more ecosystem organic acquiring in is getting two on the that. – Yeah, start mobile it's

reasons properties of aware acquisition copy, advertising in and start like people at conversion interest into them franchise, the we of those close the is one have the Potter of if an Wars more and Thrones strong funnel. the can bring effectively. to relationships much look Harry billions convince they we we They're and the and with franchise day why Star billions of So one Game

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Timothy O'Shea

Frank. you, thank Great,

Operator

Thank you.

Doug Our next question comes from with Cowen. Creutz

now Your open. line is

Doug Creutz

been user Thanks. would Kind for me Peak, to I digits the looks it your for If XX% Gram same-store, have in pay around down your to and quarter. other booking guess, of some plus follow-up and I a mid-single like question. pay to the I mobile take mobile user adjust

that if you obviously and was With said X%, Poker flat, could way up Friends to look Words that CSR it? at X% was you is verify Firstly down growing. It then sites be there that's reasonable lever just a that's And Social Thanks. secondly, in or that other something seems some on it, weighing down to just must curious older on sunsetting you're there? else there going is me and there is games I'm that

Gerard Griffin

you in Poker coming is have and going over quarter; With look good growth these news when percentages. a that's those Yeah, the older quarters. of the Friends, go in working off The Ger. like the just the against mobile how but about up is quarters, through that's is quarters. that, we're is slightly less, -if to talking Slots broadly flat profile the obviously start; to drags Words quarter the terms through got the this sort you it's Doug, time, at as two good down and progressing they Web you are single we're digits become that layer business obviously over you of still CSRX.

Doug Creutz

Okay.

Operator

you. Thank

Our comes Hickey Benchmark Company. Mike next from with question

Your line now is open.

Mike Hickey

so of when for size at may taking hard the you mobile games, you Thank look if you. quarter. team could can the you down opportunity that the is curious the sort This will opportunity then when see curious today, taking biggest answer, at update games category, be think these the thanks of on be each size you on of but it's you helpful. and you sort look games coming time five where ranking wise to for average or list. guys, And your congrats also us these of make sort out as to XXXX, us questions, Hey give any of the sense in each

Gerard Griffin

against you obviously, it's sort then Mike genre our but games just out of market very both those with large believe, of a if into, overall to be the mobile than about, game and market call. in going Match-X you of genre. then social about competitive compelling strong we have of the smaller kind to still, where think the the type brands when not a very are in going in genres that's you a of giving ecosystem, on games. guidance there, at think at a the audience we're been part into set of terms it's it's a Harry the a to a slots we're Thrones Ville FY brand look XXXX And past But size, think game playing are obviously there larger just mass and Potter if addressing it, you Hey, in more, of they're they're bringing a look Game this on marketplace obviously I be brand

within how context have give the games a now, I would and it launch give period. So about in that's a right do games what – window we believe and that's a these can XX-month, we're expectations we ultimately obviously would XX-month thinking you I over you,

Frank D. Gibeau

call the terms the much we you on been reusing that R&D this can about In line. today talked and games anywhere what resident and model, have technology on mobile Many dev. you're years between some have two for out game how of depending the one been you're with. in and OpEx of time the part under starting development of

current of a it's So, again, funded part is on complexity. launch and typically operating these With to to and think six the the year category the on model. are depending soft regards we months one depending

that's might game already So games for while been little a launch, FarmVille like knowns. for more development a have a brand-new, longer than under sequel mobile example, a or that with soft we've or an a with a CityVille adjacency built-from-the-ground-up

We in you'll CityVille the one they XXXX. has game right pin, start and we're So learning scale so soft and of team with half Star Wonka estimates I in the a little of is from first going we second Game not XXXX, also levels coming half being a see launch to releasing of and values and XXXX in with Dawn FarmVille you is experiences and soft Merge launch so second the about would and to core XXXX. production talk week, at Those like half. so Titans, one the bit into longer. Gram the in CSR out it now, to this Thrones that did next in Harry expect try see about with what have of are closest Wars I thinking of think give year, a with from that of take us that to then you right best Potter higher now standpoint

it, with under but development not XXXX. in are We

Mike Hickey

what's to head real And – is XXXX? in guys. Okay, thanks go going count up your your quick,

Frank D. Gibeau

larger markets. in international currently that. guided around We We're haven't X,XXX with percentage a

Mike Hickey

Okay, Good luck. thanks guys.

Operator

you. Thank

question next Barclays. comes with from Our Gee Ryan

open. now is Your line

Ryan Gee

good questions. Yes. Hi, afternoon, taking for the thanks

either games might you those both next the that of think when one Or briefly could category mobile for that is contribution an joined I you differently years? about is at I about those actually genre? FarmVille, year? thinking before to on to it look comes this Zynga, if Thanks. has either last capitalize how you're you're have indication out mean doing since on the reasonable how CityVille talk potential So what or maybe changed of but as

Frank D. Gibeau

the for question. Yeah. Thanks

higher they new they more think that for Tropic mobile. the so came how Country We they and and occur So of and have before some them new and we've management team those you're the the Escape lot out CityVille now ground have but in, Escape we the about we ambitions had to that happening operating inside modern were category. this then look learned and time; rebuild from been yes, that at the changes how the FarmVille. did we've at games a start you scaled, games referencing for those been some the for look up When came frankly to and

The experienced. that opportunities. teams is those the addressing are good games they're that on very are So those news

teams Day about for mobile ripe from where in FarmVille whether category bringing we are seen a so think category of are these the worked is some Hay of category alongside it on and excited we're with, and talent building overall also in has and Escape I more Country our mobile Helsinki games is on versions Web innovations San innovation two great is It's and team or the to Escape. versions recently bear. have and that titles Francisco team they're this that in in a operating the Playrix. very Tropic here Our some of CityVille it's still before; this category in is FarmVille the The experienced

advantages the audience into how particular do has look that we're of so out, we those taking next about as a account. the game FarmVille as FarmVille roll we all a franchise think and from past active So still in well very large as as will at

Ryan Gee

a And if then I follow-up great. may. Okay,

about to for say over business. percentage a a in the sense guys help or beats casino a are legacy at you to the going driver in year, beat in amount frame help of racing growth titles. bold it your to you time? or for or I'm each wondering words, us certain existing the make can certain of new if bold delivers that games Does us think beat that us way or So a to is to look other In bold be value like or next uplift bookings any in there the think addition any way? you genre can a a about help

Frank D. Gibeau

of think & beats equally; beat CSRX. examples some in that are worked I following. play-oriented. are Not The give I some And well bold was game event created with more I'll start bold purely two all you would are upgrade the that. extremely content Furious Fast content,

on partnered with that company and Poker helped In Poker. went Tour it we fact, inform the why World after

data tournaments, a that that is on. reactivation. you product it's have a contribute, of tend we of sometimes bold given they you carried for beats that So, science quarters quarter upgrade but and Furious sense example well move you'll our the a and a very but bold & Fast of and first work. and many beat if bold of but all a and long saw content not to equally, was management, good beat time game they do play-oriented that lasted growth new that simply will levels every we how when engagement then measure they're spurt created well, last added the we many, as added Poker have one consumed And game and

learning bold game. We we've turned it's that to it its a an continuously game terms scope the timed took in So you we've is it expansion beat this so basically tell committed Christmas. we're and CSR upcoming at what increasing applying the and CSRX see to can with that beats, almost impact to I you into a full Classics, as bold of big Christmas, and very

bold Friends. as with into We as really beats a series With player that new Words planned that there the on on think economy have for tie We well behavior, engagement launched. of we've what's new happening will

we that knowing looking them think bold rates what we definitely is think quarter-over-quarter about than it at but to sometimes types think by be about you So beats quarter, relates another. I quarter of and that going that one doing, understand do back will growth as greater can we're

Ryan Gee

guys. you, Thank Great.

Operator

you. Thank

final Our Consumer with comes from Stochel question Raymond Research. Edge

now Your line is open.

Raymond L. Stochel

taking Great, my thanks for question.

if one And the growth titles prior that, off you delays questions you are directional amongst in some launch then in count XXXX? be projection could expense how would addition piggybacking Thanks. you contemplating that for that or out plan you're any So, operating to putting to rate that potential in cancellations head there? give

Gerard Griffin

Frank are guidance haven't current We given in against but head games. head on for mentioned building as the have count we earlier, count teams that XXXX, these

are teams obviously team you than a on like would And second it could which for those of while I this of games. even these the working repeat something a these game more question, teams been ongoing. does recent say in obviously some those been scale, it they please? but have is other have of it, Wars though fiscal, have and through Some will your most working then around on terms Star of smaller projects

Raymond L. Stochel

for terms OpEx that the you growth get how rate year? cancellations into we or should into far that In if to soft hear that for a would around margins contemplating that about game pushed, be as, XXXX actually canceled and or do could and launch have as your mean you're go what of your think the potential as we you accretive delays during what

Gerard Griffin

launch games, it, is marketing. the less in when of is of think and in scale you any then company, we cycle team, of console the about to our investment particular this about to guess actually they've the games, as gaming the put and larger investment the I way studio element sort element, larger the level the get think your is think smallest a same so for given players for I mobile

and hypothetical grow thing what operating obviously the the the managing to the new company. again, about status we expectations. game our in through real we sharpening of out, you'll relates time or don't we've about going we're build a you to it. our launch beats new never more on obviously, between feel our to earlier will be which have games, a so in bookings because my to that's as downside that don't both need a as taking I to when have our give is in game off basis, hypothetical gone So past, think games, year, that I'd review bold the any the reduction bookings take games expectations relationship a the could of reduction we you business need said a but one – launch you it any on I'd but new the a in mentioned obviously a company, but would we accretive an we on if table be feel potential we our scenario lesser, where dollars, scenario actually terms I But more event scenario, something from But a accretive happen, we my margins, live and depending our model have also a there marketing regular in relative timing, in this think I've in

if metrics thing work So of we with. lot obviously you our But is the get progress ultimately games we're with you terms data the dollars did and want a how obviously define with first development. then against to have delay, the soft in you and drop continually launch, marketing more we'll to the, looking to at they acceleration once have into

Operator

return any closing to Rebecca would not back for this like remarks. time. any the questions I'm at showing you. Lau call I now over Thank to further

Rebecca Lau

just We today. joining to thank for coming our look right. Call want more for, you connecting We weeks. with Earnings the All forward everyone to say to over you

Operator

in Ladies have you and today's Thank you great This for day. gentlemen. Everyone conference. today's participating conclude program, may all and disconnect. does a

Zynga (ZNGA) 31 Oct 182018 Q3 Earnings call transcript