ZNGA - Earnings call transcript Q2 2021

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Operator

Thank you for standing by, and welcome to Zynga’s Second Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question and answer session. [Operator Instructions] Please be advised that today’s conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your host, Rebecca Lau. ahead. go Please

Rebecca Lau

and Call. Latif, Zynga’s Quarter Second Thank welcome Earnings XXXX you, to

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

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

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

Now call turn to Frank I his remarks. will opening over for the

Frank Gibeau

capped growth to continued announcements times. on dynamic Zynga the strategy. long-term of Today, team’s for Thank a guidance, exciting ever making delivered everyone, afternoon, Rebecca. reflects thank commitment through our off bookings and ahead and connect are significant revenue that several We half games This QX you, earnings performance QX first including the progress for flow. these we year call. world our strong our you QX quarter Good this best results demonstrate during joining of our cash unprecedented operating and

to on I of a following start more Zynga day just detail like the team ago. the the welcoming While we to these Chart of close acquisition in Boost discuss our call, each by officially would later

the We our million, up increase XX% look quarter, are of to in an of Hit with XXX year-over-year. talented QX this forward acquire Starting to rival. we In team we XX% million, franchise ever QX StarLark, to announce Zynga revenue to of also the bookings highest addition, performance. the makers golf welcoming delivered In record excited later of our year-over-year agreement QX QX. and our XXX

combined operating $XXX generated QX performance, positive top-line leverage of highest operating ever Our with our flow million. cash

innovative Our engage of leading franchises are and strong advertising our teams By and portfolio live to management, our and release our acquisition QX our players. product services were beats driven results attract data best-in-class capabilities, diverse bold by leveraging science, platform. user to able mobile

of feature magical blast spells For QX, puzzles deliver event and between fever Toy Peak’s a are anniversary example, of release In of our and also Harry these to in at results. of continues the bold beat teams. a in a to a Potters, engage way new introduction the we provided strong Zynga. portfolio, performances mischip team’s compete club-based in tune first both casino release also drove social for incredible new franchises as Blast Discord approached and in Within players

and and revenue Zynga delivered QX best in best bookings its bookings all-time Poker another yet revenue quarter achieved Slots Social nine-years. while performance also

new in in introductions During of bookings to that top-line publish unique driven repeatedly company development delivered category. by the Rollic titles process and design By hit Friends hyper-casual and QX also unique Pass was incorporates leveraging revenue this its Solo growth insights With measured quarter all-time a sequential delivered generated demonstrating the the and and rigorous in its Rollic data key fastest-growing also content. history Words and downloads. revenue its recent its best testing, quarter, in competitive record Challenge is by game world ability we performance. our bookings best franchise’s advertising Rewards the and XX-year

COVID-XX reached already declines these back half of top privacy excited are softness maintain their first audience we same monetization. in In challenge to improvements lies our Play, in to the hair short-term of end driven reduce the acquisition of new downloaded we the the At one our in are and QX, time, period. May, short-term, XXXX. in and changes trends on the the XXXX primarily UA we bookings cohorts bookings, and and our free April in In our related Apple’s Queen business. in as believe response, us. who within June. number spend of Toward a our saw cost part in game user targeted dynamics installed have Store great our and we games reopen communities nature, the while Store one began the players restrictions, and privacy market Google scaled adoption returns, reached this game performance in to with core top about we in growth resulting free U.S. for in that by pleased engagement higher accounts majority yields Overall, created resulted acquire vast U.S. B strong reopening players. to the we our player in the navigating the We fewer continue games in especially seeing of are that during number and ahead installing Google are see Play early example, that potential position position App our choppiness however, are of downloaded to Apple’s changes For the and App in

our engage the to second also we and As live of increasing are monetize year, through the the beats bold we number base. of services progress our player half further across

of we QX as the of FarmVille remainder live Given services launch the our are dynamics, to X short-term well adjusting XXXX for from moving as outlook market QX. these

are XXXX, our which call. While the you we shortly for about Ger are more on for expectations our revising top-line full-year, we will guidance profitability tell maintaining this

growth place from the new our services margin look in expansion multiple ahead. catalysts Execution we fast-growing and strategy our that positioning sector of our growth Zynga organic incredibly and enables top-line within dynamic entertainment expanding we to drive in ahead, As live years game we the are by multiyear growth strong deliver pipeline. have and recurring and portfolio excited the interactive to

investing progress First, addition, entertainment meaningful addressable Zynga expansion which and games, technologies, will are cross-platform meaningfully Since total advantage we hyper-casual to drivers and In our increase strategy: in launches our industry. advertising play, upcoming Zynga’s interactive potential organic the of game the last notable have of enhance made our have be update, for all key growth the within we new aspects XXXX. further in market growth international ability following and our across competitive

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production markets momentum action-oriented Star within hitting been in in will exceptionally and key creating by title’s enter is Hunters building QX. are and new Wars: on The and we In has soon cross-platform feedback, positive on game modes addition, game. play this features multiplayer select launch generating the milestones soft development in test mobile initial

titles and making strong progress new we also in new are on market XXXX. pipeline, studios more global expect game exciting to test Our our

games million billion reached as in hyper one the number games have XX free casual portfolio or XXX XD X This App of Second, Rollic each Heels worldwide. one publishers downloads establishes recently Rollic’s the one with over position world that tremendous Store in downloads surpassed generated have number two and High further as largest hyper-casual Master the the as Hair games total downloaded which top milestone well Challenge, U.S. titles, Tangle worldwide.

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Entertainment a of we be platform, can the the Zynga’s high-quality advertising advertising partners. technology close Together, possess Chartboost announcing in content, complete of direct monetization all second ecosystem. and our portfolio and StarLark, our elements player meaningfully and are the golf the global fast-growing access casual early the creative expanding also game with Chartboost international and with establishing in Together, reach golf and brings enhances advertising applied relationships, rival, massive scale that across meaningfully acquisition grow reach team a acquisition presence StarLark agreement position with by mobile competitive ability level acquire audience the to new a Chartboost growth full platform. of to team Zynga largest excited proven to a and world. Zynga’s the and expected This to the remain within together products world. development. talented ongoing base. to summary, the in mobile the Gulf as China-based well leading create faster talent developers Zynga a additional positioned are Zynga StarLark studio well with publishers in expands of the by region’s unique game we incredibly we new of our Today, stack Third, of and in enables hit advantage are Zynga close the following Zynga’s as Rival next-generation China-based development QX. mobile In trends to Chartboost, as our of acquisition Interactive game Fourth. one

have investments capabilities Our our also enhancing our to Zynga’s while our culture. studios, scale and platform meaningful amplifying added to-date portfolio expanding collaborative

turn of continued value our While improved in that, top-line teams to we short-term now I in turn, in results With will the more us navigating and remain the QX position forward would Ger shareholders. leverage we growth growth that players, call long-term multiyear dynamics, our market This, are outlook discuss years. like coming over and will for more ongoing to strategy generate execution and detail. for confident to operating some our

Ger Griffin

a ahead history. kept with We best half performance QX Frank. you, Zynga results of in bookings great QX and first guidance, up our our revenue delivering strong Thank

key growth great We of aspects have also our multiyear progress strategy. made in

and the in of advertising we unlocking Chartboost acquire this to Today, StarLark some Later growth beyond. more the forward developer team and China-based On talent into look to Zynga echo to within that to we outline an I like pleased will details platform front, also I and our Gulf Frank synergy of the entered in would call, and acquisition. opportunities this welcome agreement announce are have XXXX rival. to

to-date are with to privacy XXXX adjusting changes. outlook our communities service While we and we games business with that our are of well of restrictions new namely and two remainder the reflect live as market dynamics, Apple’s for the overall of the easing reopening from COVID-XX fundamentals, pleased our performance rollout as

on more guidance are previously revising communicated the we top-line guidance for XXXX. our While later. our expectations maintaining are profitability But we for full-year,

by Revenue up across XXX Magic!, an lapped services, full year-over-year by We up Empires levels engagement XX% declines portfolio lower-than-expected million a and live year-over-year offset Toon QX and respectively, in QX XXX experienced offset and and Toy revenue discuss mobile of Merge casual net million XXX partially our and in yields. as lower-than-expected year-over-year of XXXX. Spell deferred partially guidance, The revenue driven was the Revenue monetization release year-over-year. Puzzles release XXX offset net generated versus Advertising balance Blast, million and deferred up million, Power user towards of recently portfolio by primarily ongoing million year-over-year results. or million & of by Potter Friends bookings Harry or a XX% and growth and revenue Harry Poker, Let’s beat year-over-year, year-ago. and in delivery in & revenue. million drove a Dragons! our we bookings QX million a million million This a of in up Revenue eight change contributions our Puzzle was by million million. was swing Puzzles, our of and and and & of a by end We Merge Rollic’s momentum net Words primarily record ended XXX well including with addition we comprised XX% by the XXX bookings the XXX Merge primarily from were driven quarter. both driven Puzzles ahead user in advertising Spells and launched revenue XXX% QX XX revenue heightened of portfolio, quarter pay XX million, the Rollic’s pay user With of eight bookings driven million of year-over-year, million XXX of net partially bookings XXX of was Live strength deferred top-line revenue. in hyper Combat. deferred XX XXX% Blast, hyper-casual was in services change two results pay primarily better-than-expected with Puzzles record Zynga driven XX% from by Dragons!, deferred as Empires as the

Turning and play slight these investment Outside for the to contingent development. income year. guidance performance, attributable XXX cross-platform to growth our lower hyper bookings portfolio. was of XXXX. increase million, than higher income expenses year-over-year million, by by GAAP marketing lower primarily acquisitions G&A, XXX operating driven step-up QX XX% million, R&D and GAAP decrease higher million reported of greater and driven operating Toy this with particular, XX expenses GAAP more & from Harry driven were offset XXXX the operating year-over-year. to Puzzle With consideration. Non-GAAP improvement operating to consideration our million operating The was by of a million the change up compensation in operating including the of net year-ago. contingent the guidance in other Puzzles Combat were year of leverage million was to and partially Blast Year-over-year, expenses. stronger change consideration better due as QX offset down incremental XX% net variance of and primarily marketing investments largely expense, pipeline, or development marketing in and increased to In deferred by net prior versus net revenue deferred of operating from offset impact our and contingent variance the or partially Rollic’s XX% performance, and prior on in non-GAAP a Potter: to expenses in year-over-year, Blast revenue, well ramp in as The million amortization and expense year-over-year. XX% impact down loss projects and other expenses income the casual R&D of while GAAP by taxes Toon or other for X% the acquisitions, in were game and new drivers operating XX stock-based by expense. increases expenses non-GAAP step-up income offset intangibles a our by expenses significantly increase in XXX basis, On in the in Spells, expenses stronger the operating We higher net revenue acquired increased our from of an primarily net XXX our than XX expense. XX% XXX and

XXX an was record stronger The EBITDA and million our of QX flow XX million, year year-over-year. the Our in adjusted guidance XXX We of better by XX% deferred than generated and primarily operating change driven to net million guidance prior revenue up our operating was variance XXX increase million, year-over-year. cash and performance.

XXXX, StarLark As payment to of close existing approximately of of investments have Rollic, primarily agreement contingent of future the close subsidiary well us as now billion purchase Xth, and acquisition of Games. acquisition of million, June by in mechanism XXth, approximately the price to the Chartboost, consideration million earn-out earn-out XX the of use we to in cash gain of Chartboost closed we eliminates to a in of fund the amended consideration we integrate paid X.X for executed including the a recent the invest to million remaining of expect opportunities. the Grand payment XXXX. and acquisitions, the purchase remaining and which XXXX Rollic we Zynga XXX cash. total total us latitude growth QX, accelerated Effective In In July Rollic. July purchase we The Zynga business final of with executed which XX% is is for August XX also related February agreed cash of obligations. the greater million paid fully million allows which an wholly-owned future and be gives as to and existing XX XX

no had credit our available also June XXX facility, million of as We under outstanding have which XXth. amounts

There some mobile Developer China-based rival and become of talented of hit to would to This rapidly period franchise. I in points downloads stock outline the we expect casual price over studio final XXXX. Xnd. closing closing consideration million brings estimates million, XX-day franchise, a game estimate August being additional game trading financial purchase XXXX this has acquisition is our price represents to high-teens the comprising EBITDA hit The approximately acquisition XXX global golf the related adjustments, ended a Now with issued to StarLark, Golf in business Zynga associated We second the initial the earn largest like rival. $XX.XX with close in million per XXXX. is average XXX and quarter closing on grown the XXX of include mobile a at of and will six approximately share the golf purchase transaction for no XXXX that based alone. million consideration mid- to world of The fourth and to out the approximately acquisition. Zynga for approximately also share common customary multiple per cash the

Given which outline integrated, be acquisition. this immediately our not expect updated to closed, I from contribution this will any XXXX line. that or we top acquisition not Zynga’s is accretive guidance, will the shortly, Once benefits transaction assume does

guidance. to Now

guidance been XXXX, Our information based to XXXX and the developed on X, QX us full-year prior methodology available to has on today, and similar August quarters.

and revenues bookings given of the short-term latest dynamics we new COVID-XX volatility it services XXXX. by our positive remainder adjusting range Frank, continued a of uncertainty our guidance, changes, the pandemic around Apple’s outlook as level of negative, of and business for our and is potential are outcomes, context market there game results. noted the wider In ultimate both the to and privacy the and Given the live for relates

XXXX. our for our guidance we are full-year expectations, maintaining revising we While profitability top-line are

Now let’s and QX XXXX discuss guidance.

guidance in of of Our prior up the million follows: year loss quarter. XXX QX XXX up XXX XX or XX prior EBITDA year increase or as of versus Bookings million. XXX of XXX year-over-year. deferred Net in a million revenue million is the Adjusted million million, million, revenue million net year-over-year; five of XXX quarter. XX% million X% versus in

our performance consider driven Our our guidance will services. include: Some be to live top-line in factors assessing by QX

this guidance positive as not hyper-casual will titles & of quarter and Merge we bookings top-line While Apple’s a Rollic’s mobile titles. does game an benefit Puzzles additions occurred will advertising and well QX. perspective, Dragons!, anticipate Spells, by our pronounced offset of privacy QX. as older full changes year-over-year Harry adoption advertising at broader more launch pressure assume be in June, in portfolio, than declines Magic! we well as be any partially we launches, web Merge other which the as in contribution from hyper-casual from the Potter: of end of short-term on in revenue of expect QX given From the to Outside

We primarily deferred significantly expect be the year-over-year due year-over-year up gross revenue. margins to to in change

We of expense consideration the to revenue also GAAP and revenue deferred percentage expect due offset contingent year-over-year, improve a to higher significantly partially operating lower change in expenses. net and stock-based compensation as primarily our acquisition-related expenses by

our leverage. needs model, fit opportunity ongoing to workplace the to our operating optimize the in we Bay the our evolution footprint Area of our enhance Given and taking are better

of higher live million invest year-over-year expenses offset these book be result, marketing in hyper-casual a which sublease that G&A is of and related in in portfolio, expansion D XX our lease services and games. growth to approximately leverage leasehold and a office improvements opportunities, improvements. of we factors, R& of new and related impairment will Rollic’s to we as exit by San to expect against in QX the continue our more to our international we existing Francisco than As primarily primary including plan expect Outside and charge space operating

and guidance. in follows: and million guidance. XX million down year-over-year EBITDA XXX year-over-year the up of our XXX Our our of versus versus XXX in-line a XX% A XXX million loss guidance. updated prior up than net A net million our prior million, revenue million prior of or X.XXX loss or million Bookings million XX% million with XXX up billion, XXX decrease Adjusted and XXX or of XXXX of XXX revenue net guidance XXX or million year-over-year, X.X deferred XXX is prior of a an prior an increase our increase million billion, of increase as guidance. to XXX% in lower year-over-year guidance. XX% year versus our of million of and prior XX

guidance As live to revised launches. I noted, for latest game services outlook reflect we have updated timing and new full-year our our

we in-line for with While outlook top-line profitability maintaining are our the expectations our we year, have revised prior our guidance.

to mobile be Puzzles web services Toy portfolio as live top-line vast & of year-over-year Toon the Blast, full-year Magic!, expect and of declines offset Merge Rollic’s primarily drivers Dragons! We Harry drive will and hyper as by from growth partially in our majority Key titles. Merge and contributions Potter: Spells, well older performance. Blast, casual

Our revised X FarmVille guidance now assumes in the worldwide launch QX. of

expect While we it guidance do more Chartboost XXXX. not do be in meaningful contributor Chartboost, beyond. unlock revenue to and now or expansion opportunities We bookings our to a expect margin synergies and XXXX growth full-year material in includes

not lower deferred in mix full-year user revenue net higher has intangible offset modest guidance StarLark contributions from rival due given a higher not as amortization change expense margins well Our our include gross We of acquisition to partially a in acquired versus our from by of pay advertising anticipate closed. announced a increase golf as yet any does assets.

play development. expansion strong we year-on-year we game in and compression operating growth expect particular, our in operating we GAAP growth to absolute new portfolio marketing deliver in our strategies. While as of invest moderate in margins In game profitability as and well as non-GAAP anticipate continue casual hyper launches cross-platform to margins,

continue be improvements than which higher will more G&A, and in leverage against growth offset by operating in R&D opportunities. investments We expect to marketing

In primarily impairment growth to charge million management net generate to now by and FarmVille including San our our a top-line of related with sequential driven office XX with QX. million, stronger quarter services, in stronger well guidance, cost sold and is performance, lease to as of operating prior improved profitability see QX, from improvements. we but expect live The advertising in to expect the and a Francisco ongoing loss seasonality contributions our XXX in-line leverage X of relatedly We expected of primarily existing launch as modest our first Chartboost. top-line deliver combined performance

of Zynga Our our in we our XXXX, strategy growth growth XXXX positions continued expect for top-line launches. growth execution services game live in where and from double-digit organic low new

Over progress With the will longer-term the next years, we call continue several for generating towards goals we achieving while to margin your our operating expect open to flow. stronger operating that, questions. cash now

Operator

[Operator of the Ng comes Instructions] Our Goldman from of first question line Mike Sachs.

Your line is open.

Mike Ng

you good Thank players question. afternoon. cost acquire more relates the wondering bit Apple very are expand to little in seeing I a the Hey as just the it you privacy today you could on changes. to was terms much for what if of

and You rest and then mentioned for are How Thank marketing the XQ on you year? much. back the end you that sales scaling towards approaching of of second the now very quarter. the

Ger Griffin

of is now of are seeing, the there were of going a we improvements operate, and our scale our the seeing as channels in we channels we But latter obviously, what we UA. that Mike, obviously, Hey of versus were half diversity through variety portfolio QX. the given

and opportunities looking get back returns. to you UA, our are know, returns because have targeted We are that for our in-line with scaled we investment as

trend channels and going There are And improvements. continue that still not obviously we the quarter, we see are over calibrate into are so we out there that to are optimal we expect against channels. not And channels coming for to continue. investment us, seeing those our where

returns. in channels where We do the kind and are we improvement operating see of right

Operator

Thank you.

Parker question Capital Tyler of from go ahead. Please Markets. Our KeyBanc next comes

Tyler Parker

the for guys. thanks question Hey

letter, decline the on cohorts newer late commentary QX. Just the in in in a about reopening talking

Just provide curious that. that more cohorts are far. still can than like nuanced is franchises secondly, color it or maybe broadly is more sounds And you or it geographies your older strong any there if so across is relatively on whether

year Thanks. further I how spending retaining in So the the into other well opening? you and are guess cohorts confident

Frank Gibeau

Hey thanks starting XXXX. the we in June in cohorts joined weakness late Tyler, The network saw from in question. to for and our that emerge July was that May

as so an lift, area starting weakness. was opened that saw So That And weren’t The new do. things recently we time, economy the were restrictions play was to acquired. that we these weren’t we or obviously returns. compounded less were has started seeing to IDFA by And cohorts was people to other where the we COVID started up. players, hitting the the see the because also that acquiring at same paid fact to

And dampened of of is what business. bit so that that the part a little

Now players playing they early more cohorts much, us that and even been monetizing COVID before with hit, at much, time, also the COVID, if same had not are in are as they engaged as more.

been have for very revenue, be July we think encouragement as see. gives IDFA this vast short-term why nature. And majority audience resilient, even for started thing into to encouraging cohorts, through move a us base starting are are in And moved to the and has to changes So the to And weakness in in there. and very is we that have they of that strong. held improving that respond for very our able we through period of to see in new demonstrate returns more and us to networks these August, these starting

As we franchises. have spend already to year, into social category really move into we into the holiday, of period in of starting well. the the time, casino as half players of some did acquiring a new On back basis, started this move we our

very talked numbers that well. that in the an In of we did end Poker had hanging about those Hypercasual QX. nicely. you towards think in amazing I that quarter. our see period, there saw we

and saw that probably our of pronounced titles, in weakness portfolio. where our the Some terms merged audience of areas most where were in drops you was saw that we is

Operator

Thank you.

comes Our from Eric of Partners. MKM next question Handler

Your lines is open.

Eric Handler

you Thanks plans talk what I causing Good add-on content games? know schedule games. Is little are seeing is for afternoon. a are your How with for that Merge there about there your the those could rollout anything you if you wonder the question. bit is some weakness?

Frank Gibeau

honestly. And saw grew and any really marketplace. created, The they in Merged a opportunity Magic!. exist to Yes, with those followed Eric. that They didn’t This is category a competition. up it up Dragons the wide-open Merge Graham until franchises without they category then launched really grow

the have growth. They QX, CPIs last largely out these few that competitors As doing and a live to was competition have category. the We bring games what the and degree products, a with really And because of QX quarters, of intense the into new and the growth the copycats into over lot seen of leveled we teams in starts the response. that remain result And beats very we spending to game has their Merge drove drive-up very bold back of category of audience get we bullish And position emerging services new category. seen this was still really very that Merge innovation. the has in people large on a that as others saw been Graham franchise category the potential number planned at mechanics the what that in is in Dragons! base. slowed We still the is it one are category. particular, that CPIs that a retooling that dove have of think The with up very in is mechanic. a our really a lot for Graham in competitive popular, with is

down that as are beats of away. we So some of of investment to this period position the bold of competition, we have XXXX. seen Merge our into grow fall and into we out to this to get into half doubling year and Dragons! in start start the And second intense transition

Ger Griffin

times the can a few at like the Poker thing it you I is services expect capability add are in when would situation our results ago look other saying live be We with back we of has would Graham. in had there than brought some of as a some same situation quarter. powers weaker to years one it its is last and The you of the best portfolio,

have kind after, focused we with and is what need So Zynga project it teams we is than I will dealing challenges. these we on the while that get capable something of are management you at more are of tell to

Eric Handler

your been over you mobile you the in dynamics about follow-up, there? Can it in about a of talk are app some a seeing as just then And that $X.XX - the Great. quarter, the two-years. is lowest little

Frank Gibeau

out is That it much the to jump vast That has that. you large pull made the portfolio hyper getting if it related Rollic, than casual to caused higher scale. is really Yes. amount

Operator

Thank you.

Creutz Our comes of next from question Doug Cowen.

Your line is open.

Douglas Creutz

Thanks.

at you comments softer your sense well? guidance, splits down being game give given between ad looking bookings bookings million how that Just you guiding a sequentially. online as are about your about Can XX bookings and advertising of

Frank Gibeau

that it to in characterize the pay. user a we user Yes. third with as, The to for bonds QX. in of it attribute of pay I is say you half is speaking, larger our element would How could second as experienced factors I it late the roughly the in broadly would advertising

Eric Handler

to beginning a find the trends bookings just is out a this initial but there saying couldn’t headlines are are real your then shareholder the company was And anywhere Okay. in when came statement indicators phrase out, But detail, actual on of Reuters, believes in shareholder letter. stabilize. that that seeing came letter I they

with? that you So I comfortable mean, are statement a is that

Frank Gibeau

think Doug, our our like and more cohorts those what games. us cohorts is we COVID, seeing across think, of cohorts we look when it, user indicators, that if listen, acquisition. if it monetizing Because, cohorts during core are you at and from our interesting is in step the in achieving you is look that yields for were back actually improvement are joined us are engaging we are portfolio, in these with early pre-COVID, and strongly. seeing we but some I CPIs are I improvement Obviously, that us

the we and, monetization. okay, phase yields. quarter, is, we user saw next Now to bring in have terms how new beats what spend last into drive in? to obviously, bold against our those continue The do is cohorts So this engagement, charts and drive we acquisition quarter MO of given calibrated

as enable means us we now obviously into drive - that implied yields a see we we essentially are is be to is which to QX. more able ease stronger invest performance, that should up, As that performing booking against will and it get channels

some QX. We our moderate live bookings assuming in are service improvement into

Operator

you. Thank

Our ahead. Matthew of go Morgan next from Stanley. question Please comes Cost

Matthew Cost

the Hi thanks gents, talking questions. for

marketing them, permanent. those confident to the looking the changes of both then versus where how break efficacy ability ecosystem thing, And sort and their the marketing of changes on can impact to of your and just work are to elements you And guess work I ecosystem, for through So marketing the obviously, of it get the But out of reopening are to the you decline each taking to passing marketing out what between back in been magnitude historically? has from the XQ reopening steps the are side? particularly issues XQ? the guide then those here, you is and in in

Frank Gibeau

Yes.

as advantages are an tools, the ad talked and new at be retool. to work happen to our look choppiness committed needed two data in Really, before, we that look we improvement into need what is is audience improvement that you seen IDFA July going June, IDFA of and networks. to because we if of seeing we about when what have that communicated working type and supply And iOS see have very and through. in and different demand short-term to July that confident something our it factors. do thing and in that And it where hit at through we in period are that working feel that, we looking for, when real factors was reopening June headwind through new started negative. with would something We management. we with impact, already that. that product have in that it was remain late we we a scale dealing think we We networks is I advertising the we in IDFA we in UA long-term, products, to said to adjust It are that trends. the had just is at a again, August, to way XX% in terms Well of that that early don’t is an then by going terms short-term the in a the but nature had had really

started because products. that have on on good done have we to networks improving job buy weren’t they before a buying their We

done to that job an As a adjusting IDFA. good network has a Unity example, is

terms in spread In do of that, the terms addition between we techniques to of some types LTV. looking calculations of how at what other and value we install a used doing in have player, are we

a techniques if So see of you variety see it predictive the deploying then that different and results, are they start is we you experiment those. against you

time start to games IDFA seen how things to I’m and The cohorts more been they expectations. as COVID. make saw go is with in bit have the a They confident were have choppiness in hand in well to have less feel that things, to other we to in an in that we operating rate. of time. that regards has the that spending games had So in of the less an towards that the softness earlier have acquired within back little run the a very XXXX, seem cohorts outside good operating impact That where and of games. able very reopened were they adjustment and other been we committed for They things issue more increase. has we been on had versus trade-off And to period do or go

something impact was forward. is where again, May that mainly late to in the and carry we that and started that, So happen saw

more the you hit usually, with run and late ROIs been this been And offset in lucrative the users that with Unfortunately, that is would lasted into beyond, strong, that from strategy of that turbulence engaged terms them. look good factors would do are starting that would they short-term encouraged and very have trends late May through Now that, our you business of against that we what is same additions our and why have and is been and would live we in they are have in through to are is very improve are July. we of committed. to very improving IDFA and are outside you time they of confident strong. spend our UA money And the additionally with at new softening, is services we have by XXXX we And the those that rates cohorts inside as where happening to thing fundamentals acquire that addition it. been growth forward IDFA these moving long-term

half turbulence of line was for trend are investments we working like for sound. inside adjustment Our adjusted We have of and our we And related feel our way part COVID, to second live that that. just are we market through today services. the

Matthew Cost

you. thank Great,

Operator

Thank you.

of Our JPMorgan. next question David comes Kanovsky from

please. question Your

David Karnovsky

relative skewed platforms your some longer-term a the seeing, Android, just question see of more a maybe maybe difference more new the iOS IDFA. and you versus Android? at all challenges or have your Historically, the opportunity or towards do around the impact ask you Frank, bookings of games to been are need on given in optimize towards game privacy launches

Frank Gibeau

have a anything platform Android. strategic versus investing is always an unfold we for as special parity as us. tell the do mix. And we we Android have for I platform interesting question seen a in you Yes, We necessarily is that it iOS. platform Android been inside don’t has us. dynamics look of been Apple at It can for

users But particular, acquire short-term. in more we that we strategy. to explosive will And a seen from Android that. and standpoint, have platforms there been on on towards Android we money more So continue popular, is sure, think of Rollic the I for the spending with platforms that see growth very mix have you Hypercasual in

lot we in ad we normally. year to as functioning further much longer into of the think are get I we now, is up. driving you XXXX. of out think see changes start are is a seeing I Android ecosystem, leaving in But the term, obviously the people very the the will around products come the in offset innovation into think in to start money ecosystem and right as part of which it right now, start general, put But that prices I back

Ger Griffin

yield get capabilities all do and to lever point I improve platforms. XXXX, that you across your Zynga, leverage beyond obviously, add, opportunities the going and once into thing bringing use to, see to and other would think The together user about XXXX with as within the our of we enhancements Chartboost and see acquisition think we

scale look as too, user have be think think tech acquisition you you we platform, the when look we at in scale, forward. of our important to our audience ad I is about the going driver going So at an the that efficiency size and

David Karnovsky

StarLark. Okay. I one could ask on If

games has from Your to point. this sports stayed away largely portfolio

So is Thanks. M&A? is why and more either time this sports presence for games your good or a I you guess, genre want new where expand through now to a

Frank Gibeau

it When same fact really fantasy-based Yes. golf at it and the experience. to it opportunity is appeals the And highly but is a very that broadly. StarLark, at is is looked we time, we genre the a fun really rivals, it Gulf played experience. the in PDP with important, work casual And social

So category. attracted category. sports we to are not is why social game and we really really design casual are looking PVP to simulation were we that And the to enter the entering also this What this in development is team.

but experiences type that expect is can and hard growth look necessarily player is nature core and so not social it their from we kind of if think what for is that that simulations. and And of optimized us engaging at long-term, you I with in for pipeline, features sports that PVP monetization highly behavior, are

play realistic simulation golf golf. definitely it of a is rival, not you If

put down And so why more category of more sport to in we it think that to a we investment that opposed starting is genre. casual in are as

Operator

Thank you.

question Please Barclays. next go Mario comes of Lu Our from ahead.

Mario Lu

Great.

is on Games. Peak First question

IDFA out, was both once does the this door to I implement So in rolled them. you low-hanging of the advertising that now fruits acquired Toy open is one Blast. that Toon and believe

update helpful. be any would there So

Frank Gibeau

Yes.

Peak the sure making plan ad pay for and are kind a of function deliver We timing is we of experiences are the to to games. to positive Games. continuing evaluate that the bring advertising It and that more

you that very value to players When where have the it experiences. actually they demonstrated a right ads We Games are way those receive tune can is with and the when advertising retentive done mechanism. Peak deliver we return, positive actually as testing and you actually

So it by coming our it and XXXX at beyond. are it of XXXX, something not to we deliver. is end is something road that is still looking map Obviously, the is but in into

Mario Lu

clarification of kind question on and Thanks a Wars’ title. Great. the Star

the mean guys that XXXX still title as possibility entering is enter there well? we assume that XQ. - XXXX said will you the markets well, test game does Does launches a So that or that in in Thanks.

Frank Gibeau

likely QX. part to early go more Hunter’s It Yes, test the in of release will into is in XXXX.

adding is from forward into a learn. a but positive would that response don’t iOS, really why and we early So it we so Hunters look what lot we to and has standpoint. And been financial are on The of game because get and Android we like our in Switch. hear doing of well, have is test the new see features and

Mario Lu

Thank Got it. you.

Operator

you. Thank

Oppenheimer. Yang Our comes of Martin from next question

is line You open.

Angie Song

Hi. This Yang. Angie behalf is of Song Martin on speaking

you what for do to year’s the of So year-over-year than what of is And can the normal or games learnings in launched future game? time, tougher around expect that your of recently initial given the Combat, to the versions Puzzle a audience game apply you are some game? reception achieve key comps? for what the And

Frank Gibeau

the Yes, to a Combat of we right little in slower of seen that scores high. start Angie, are from for the cohorts standpoint the are question. highly player are of thanks because the terms the some now. tools, off is The game it enjoying quality of reception, the in good that is in have Puzzle and scaling engaged bit reaction IDFA game a very going of the the

are to at players are taking where telemetry what are new the we the we And really features, so us, maintain the telling looking adding an from time tuning approach things.

normalized because of But get impact as be scaling IDFA that I the aggressively as the we summer. it a able fall. bit we than will more we little scale want into more to over we the is expect get it conditions, So into slower

well We combat received. game, more to the from of the content are very change excited been about fantasy has

that We adding think have well added we going Max be some that is And received. I new subsystems to are equipment. very like new around features robots, collecting

hit to and the So will contributor product, we for committed title. a to title us in making it big excited We XXXX. remain be the are very about

Angie Song

you. Thank Great.

Operator

Thank you.

Brian from comes question next Our Fitzgerald of Fargo. Wells

open. is line Your

Brian Fitzgerald

of titles process follow-up When they IDFA. Thanks hit a like difference at to the just or Thanks. titles? follow-up think Hunters, previous different give development I guys. about a And sense the is process they are costs different soft us cross-platform you you have cadences comments. Cross-platform the SPXX those can the in maybe Do greenlight for or maybe then different? dramatically on one launch Frank,

Frank Gibeau

Yes.

incrementally differently the you down country. the example, have launch games In an break terms is versus to to when very or of development, costs early high. get Android a test a on, issue to you where because The iOS test hard or marketing you you launch, by that conditions. aren’t really different can an test have region soft specific for game, switch It it is

live start where is pronounced marketing to really also the the So the services get in differences update. test in and

go fast mobile is party a game. can takes and very You first side. more lot requirements console the to with a with get the There longer. work on a it very, tested bit It little

that some are And so now. those are mastering of we things the right

need in depth There focused that in so a very You are high-quality, are excessive. example. talk for that or of something to can playable is to the simultaneously at beginning, never playable that want shooter don’t fully both doesn’t be see platform From we is using that where very engines on level they pretty experiences are together. Unreal of do console that faster same where to extra capability related there some be will very that making like common little in version like a a a on big look want these TV. release mobile to the because We that or a are But But do depth mechanics, sure the and we an screen the In isn’t Switch interoperable, version. afterthought. game nicely. are few are or on the you different. cross-play costs like to processors probably quality a of we increase and those slightly bit (Ph) not resolution The because capable, can’t things you the general, are games we degree [AXX] a not the costs regards with games mobile specific Unity. big art translates a mobile, engines are the The

we right the it material get in are be also really we from but so those what the are testing now see reaction are to only first-party is we the not are out. consumer that but very on excited teams, to testing QX, seeing that And we doing. tells going And Hunters games excited from to by very us our interesting

Brian Fitzgerald

no, And but ROI way just seeing IDFA, Awesome. a then just any was curious. quick follow-up IDFA on based by are you differences genre on any material in maybe

Frank Gibeau

Not material.

do some stuff casual some the lot subtleties that in ROIs. see social broad-based of categories has for a You example. held is in is The on there problem casino, more data, like there in some the muddiness

And for that bounce is hung franchises take of around a is And example. very So during better CPIs attribution, on are bit. if of and some you have that overly way be that to strict you might casual, if out. where organics us seen But That you depending if your differences games it pronounced. a count technical, buying, the you become more arbitrages have where casino Dragons!, in more some little out, for than lot where more, organic IDFA, bit Merge who a pull it, you can you do looks how on ones but social suffered weakness like the those more a the have there include it is again, the hyper category little need measure narrow on detail returns you that, to have be the nicely.

Operator

you. Thank

Please question Mike Our Hickey next ahead. of comes the Benchmark. from go

Mike Hickey

taking my guys. Ger, for and Frank Hey thanks question

Just here And and sort performance in of you do games the remind expect revenue? can in size of follow-up. a sort the to tiles, a Merge I those sustained have you downturn clarify us on quick of

Frank Gibeau

Yes.

of in believe have games we these grow I of that collectively we of the performance start and are last towards been we have we bold first Merge their terms to to half going in We as be here. couple a bottom to that holidays the position will think of in the beats kind on some release over on quarters. that hit head working they start the

and So is Friends live Poker explosive a now can off start acquisition them what like as over have growth. With had very retooling years. bit doubling Words growing so done with it Zynga They franchises here. have again, Graham was doing we for And been we other successful and like you a us service whether down know, leveled that what we much the or is are

Ger Griffin

and of overall obviously, the it still a size, of in Magic! XXX Merge million. smaller strong large is Dragons! Merge north Mike, terms franchise very franchise is XXX. is a south and of

Mike Hickey

But look casual guess for interesting. you you. hyper about there? you. about Thank And Thank M& to of there you on the hyper what A the opportunity then live some UA side, those opportunity do would sounds of some services? into within gains also more talk category. that you guess And casual, the is in other that heard Frank, I I maybe talk live services. Can I think I the transitioning

Frank Gibeau

of And more combination that quarters, is the few games expanding small last external into we hit. Rollic Yes. teams and bring have internal built is With the network, been development so the what of small experimenting we are at that have a been teams acquiring Rollic because that the we have teams. games some it community can over

by of really put a of teams. nice our and saw some game, inside beat time a internal first So we we in we we Hair to bringing pickup capability have and in adding IPs the engagement. Recently, launched bold in Challenge, hyper-casual these been a

really to us out major attract which developers a were games adding that more are or of putting up in have expansive to advertising see to category, that games the Rollic. had see because the we is that great successful casual over out the from into the to We in that, driven increase a going next into we of and these to think of Rollic are contributor with of you we And have there generated engagement been us. amount string how which monetization the curves lot are attract network scope bigger hyper and we so advertising, couple exciting of where start a going that should And will will XXX% put beats that bold some and to elongate we they that do hits. audience of that in more products dollars QX, have quarters

Ger Griffin

any nature similar a as their Boraq. But outs With of some the games add the continued or some reasons iteration time opportunities. of of franchises. decided one franchises acquisition are XX% thinking these where different smaller you the earn really we smaller can out other some have the is we on Words thing of have or our like imagine, And about of lot energy Friends focusing the can banner And in of we games the being sometimes characteristics or for Rollic, we CSRX lot longer-term spent of a short-term I to with accelerate think as shareholders. on have you coming the sides of a was Mike, there of to about different can of events same other would under become was both too

which interesting our of about franchises. user other and as think you The other about some promoting acquisition think you cross point, into

looking games versions We more filter. are to universe actually bring of promotion those could games franchises. could they an larger of at of vehicles on players hyper there into some to also of sort sort across for They be saying, casual a or could other casual themselves opportunity our be within and smaller coalesce and be franchises is well, hyper that create actually

Operator

Thank you.

Richard Our of Partners. last LightShed from question Greenfield comes

open. You line is

Richard Greenfield

seem better as of of August. Frank, this I beat July sort IDFA but exited be sort to into of you to to things couple questions. A getting want Hi. death, you don’t certainly just thing to alluding

you of how acquisition before it seems than And worse XX% could much you I your side leverage out we that a changes I into may a of data giving again. were as you but you think quarter to to but it of this of to acquisition we way you sort back, the you before look If take just it Chartboost could you where improve like do scale, first-party if advantage to a know where were Are can the don’t data impact and gauging all of way now. event, a second, - some changes on on extent in comment lot more knowledge it Maybe how transformative change started? look back, of third XX seems latest so not the that we about how is way whether one UA is then like of as you the things certainly or the like this be like like think XXXX, they XX% are are you just that if it acquisition to to quickly things of to terms UA we the equation? guess, won’t ramp be, sort better of

Frank Gibeau

Yes. question, it put a Rich. we work. expense. spending now the and June starting high to we at scale a can a July Thanks tell money And are weren’t Giving to what is in rating is you I for but back little tough,

get iOS, road pause, on say been now you started would through. definitely Android, to Unity, took spending we we will. the recovery, example, all have On like networks for improving have that see and headwind the continue. if whole yields where of we started I and we money the way And as was on trend So IDFA we a we that in to But early the be will are the moving XXXX, rearview mirror that holiday work. starting to we will think And the part to put into forward. we short-term be will and

progress progress positive and good So front. on that

vertical back can’t the relates beyond on the have out here. us start getting be really tech in to because to UA really and As enough accelerate they the Tuesday, ad they got markets. as we of that Chartboost, it to starting and more trends It the DSP and side it building ad Intel work as half going on about were integration to they in get what to is just even into happening in is vital normalized second the for to fast

ramp excited case, through here company. to Chartboost to start about synergies very August Zynga. the capability better the But information have on are make having and through the business, impact the So inside I’m going the case, the are They ad gather long-term the up we going we more to that revenue is third-party systems about excited that December. decisions. will very intelligence that will

Ger Griffin

that. just add to would I Rich

as tracking back the it earnings synergies are we to relates call. that We XXXX expect we communicated in the last in

meaningful we still believe and that be of synergies So Chartboost in will beyond. delivery a XXXX

been has change no there So our there. in expectations

table. them We their get is are now it the in have them the to to legs but under let happy very now, building

Richard Greenfield

for in. so filling Thanks much it

important seems just you Apple may future. in the sure to like that change - think things because help of such story an I part the I’m

get, the bigger they forward. And the becomes issue this the faster an so they less going get,

Operator

you. this turn At to time, for closing back the Lau call remarks. I over to Thank Rebecca like would

Rebecca Lau

want hope and everyone coming weeks safe and connecting Latif. We you forward look for healthy to to to you, We Thank our stay the is thank earnings times. everyone again joining continuing with call these over today. during

Operator

call. conference you Thank This for concludes participating. today’s

disconnect. now may You

Zynga (ZNGA) 6 Aug 212021 Q2 Earnings call transcript