Zynga, lately on a buying spree, takes out $1-billion credit facility
Zynga Inc. has disclosed that it took out a $1-billion credit facility in July, days after it had filed papers with the Securities and Exchange Commission to raise money in an initial public offering of its stock.
The San Francisco-based social games company did not say how it would use the funds, should it decide to draw down the funds. But Zynga has been on a buying binge, acquiring 15 companies in 13 months as of July 8, when it announced its last acquisition, app developer Five Mobile Inc. in Toronto.
Zynga, looking to beef up its portfolio of mobile and tablet games, has also been actively kicking the tires on a number of game start-ups, according to executives at some of these companies. Currently, the bulk of Zynga's revenue comes from its games on Facebook, where it must pay a 30% fee for sales generated on that platform.
With stock markets in turmoil over jitters about the economy, Zynga's move to secure a separate source of cash seems prescient. Until the stock markets stabilize, pending IPOs such as Zynga's should sit things out rather than risk debuting their stocks in a highly volatile market, analysts said.
Zynga also restated its first-quarter financial results to reflect a change in the way it accounts for its revenue. The change involves amortizing the revenue from its customers over the period of time they are expected to play a particular game.
As a result, Zynga increased its sales by $7.5 million in the three months that ended March 31, and decreased its deferred revenue by the same amount, according to documents Zynga filed with the SEC related to its IPO.
-- Alex Pham