Zynga's Acquisition Strategy and Financial Performance

In late 2020, Zynga secured $875 million through convertible notes. CEO Frank Gibeau explained this fundraising was intended to establish a substantial financial reserve for future acquisitions.

Gibeau stated the company consistently seeks opportunities for consolidation within the gaming industry. Zynga aims to proactively identify and integrate companies possessing strong cultures and talented teams.

Recent Acquisitions

Over the past year, Zynga has expanded its portfolio through strategic acquisitions. This includes the purchase of Peak Games, a game studio located in Istanbul, for $1.8 billion.

Additionally, Zynga acquired 80% of Rollic, another Istanbul-based game studio, for $180 million. These moves demonstrate a clear pattern of growth through acquisition.

Gibeau highlighted the success of these integrations. He noted a significant shift in how the industry perceives Zynga, with developers now actively seeking to join the company.

Fourth Quarter Earnings and 2021 Forecast

Zynga’s fourth quarter results showcased record-breaking revenue of $616 million. However, the company also reported a net loss of $53 million during this period.

Despite the net loss, Zynga’s adjusted EBITDA was positive, reaching $90 million. Daily active users increased by 77% year-over-year, totaling 36 million.

Monthly active users experienced even greater growth, rising 103% to 134 million. These figures indicate strong user engagement and platform growth.

For 2021, Zynga projects revenue of $2.6 billion, representing a 32% increase compared to the previous year. Adjusted EBITDA is forecasted to reach $450 million.

Importantly, these forecasts do not rely on any additional acquisitions. Gibeau emphasized the company’s flexibility, stating they prefer to pursue acquisitions but are not dependent on them.

Future Plans and Opportunities

Zynga has several new game titles planned for release in 2021. These include Puzzle Combat, Farmville 3, and a game based on the Star Wars franchise.

The company will continue to focus on developing hypercasual games and expanding its presence across multiple platforms. International expansion and the growth of its advertising network are also key priorities.

Gibeau suggested that upcoming privacy changes implemented by Apple could actually benefit Zynga. He believes these changes will disadvantage traditional marketing services.

As a company that relies on first-party data generated directly from its games, Zynga is well-positioned to capitalize on this shift. The Identifier for Advertisers (IDFA) changes present an opportunity for growth.