Social gaming giant Zynga (CityVille) has filed an S-1 with the SEC indicating its desire to issue an initial public stock offering "as soon as is practicable."
The company estimates aggregate initial sales of $1 billion in class A common stock, below the valuation cited in recent rumors that estimated $1.5 to $2 billion would be earned in the offering.
The New York Times cites "people briefed on the matter" in reporting the stock offering could value the company at "near or above $20 billion."
Morgan Stanley and Goldman Sachs will lead underwriting for the offering, with help from BofA Merrill Lynch, Barclays Capital, J.P. Morgan and Allen & Company.
Zynga claims 148 million monthly users in 166 countries, playing a combined 2 billion minutes of Zynga games every day.
Those players brought in non-GAAP revenue of $597 million in 2010 (and GAAP revenue of $839 million), according to the filing, up from just $36 million in 2008. Profits for 2010 were an impressive $90.6 million. First quarter 2011 revenues are $235.4 million and profits were $11.8 million on a non-GAAP basis.
"By offering our shares to the public we hope to enable Zynga to invest more in play than any company in history," Zynga CEO and founder Mark Pincus writes in the filing. "To accomplish this, we will continue to make big investments in servers, data centers and other infrastructure so players' farms, cities, islands, airplanes, triple words and empires can be available on all their devices in an instant."
Pincus invited investors to judge the company based on "how many of your friends and family play our games," and urged investors to play those games themselves.
"While I’m humbled by the size of the audience we enable to play today, we’re just getting started. We’re thinking every day how much more accessible, social and fun our games can get."
Later in the document, Zynga warns potential investors that it "rel[ies] on a small percentage of our players for nearly all of our revenue," that "a small number of games have generated a majority of our revenue," and that "if our top games do not continue to be popular, our results of operations could be harmed."
I read this while playing the theme song to "Terminator 2: Judgement Day" in my head ;)
Kidding aside, i'm really excited about all these upheavals in the game business. Opportunities that didn't exist 3 years ago are now part of the mainstream. While we all have our criticisms of "social games" we just have to remember that things always change as long as there are developers continue to be passionate about what they do.
It's interesting that despite a relatively down global economy, a game company manages to do so well that it's considering going public to gain access to more capital.
Are they nuts?
Or are computer games somehow capable of shining even in dark economic times?
Not as extravagant as I expected. 1B for a business that does 90M profit is only a PE ratio of 11, which is a bargain. Now can they sustain the growth?
Kidding aside, i'm really excited about all these upheavals in the game business. Opportunities that didn't exist 3 years ago are now part of the mainstream. While we all have our criticisms of "social games" we just have to remember that things always change as long as there are developers continue to be passionate about what they do.
Are they nuts?
Or are computer games somehow capable of shining even in dark economic times?
classic . Good to see you're still around old boy.