? Private Placement
San Francisco-based mobile game developer and publisher Zynga Inc. (Nasdaq: ZNGA) has announced a private offering of $762m convertible senior notes due 2026. Also, the company is going to offer an additional $112.5m amount of notes to the first purchasers of the convertible senior notes during the period of 13 days after the purchase of the notes
The notes are Zynga’s senior obligations, convertible into cash, Zynga shares, or both, with interest paid semiannually in arrears. The company will determine the interest rate, initial conversion rate, and other terms at the time of pricing of the offering
Zynga doesn’t disclose any certain aims of the offering, though it says that the part of the raised sum will be used to pay the cost of capped call transactions, which Zynga is expecting to enter into with one or more initial purchasers
Lately, Zynga has been building its Turkish hub of mobile game developers (Peak Games, Gram Games, Rollic), entering the hyper-casual sector, diversifying product portfolio, increasing audience footprint with cross-selling opportunities, and potential improving profitability. Considering this, it is fair to assume that some of the money will be used to support future growth of the company
Earlier this month, Zynga has raised $425m through a three-year secured revolving loan facility, which will replace $200m loan provided in December 2019
? Products
Zynga focuses on web and mobile online social games with more than 70 titles, that have generated over a billion downloads. Among the company’s best-known games are Tangle Master 3D, Zynga Poker, Harry Potter: Puzzles & Spells, and Words With Friends 2 Word Game
In May 2020, The company launched one of its most successful titles Tangle Master 3D. This mobile puzzle game has been downloaded about 100 million times with a peak of 34.6 million downloads in June 2020. As for November 2020, the game is still one of the most popular games of Zynga (10+ million downloads)
However, another puzzle game of the company has lately seen an increase in downloads. Launched in March 2020, Harry Potter: Puzzles & Spells has been downloaded more than 13 million times, with more than 11 million downloads generated during the last three months
? Previous Acquisitions
In October 2020, Zynga Inc. completed the acquisition of 80% of the shares in of Turkey-based hyper-casual game developer & publisher Rollic Games for $180m, which is $12m higher than the originally announced purchase price of $168m
In July 2020, Zynga purchased Turkey-based mobile casual puzzle games developer Peak Games for approximately $2B as stated in the report (100% shares $952m cash incl. $120m escrow / $1.1B stock)
In January 2019, Zynga has bought Finland-based mobile RPG puzzle game developer Small Giant Games for an implied valuation of $743m (80% shares with $364m cash incl. $30m escrow/ $231m stock + 20% based on profitability goals over the next three years)
In May 2018, the company acquired Turkey-based mobile merge puzzle game developer Gram Games for a total purchase consideration of about $300m (85% shares $255 cash incl. $25m escrow + 15% based on profitability goals over the next three years)
? Financial Performance
In 2019, Zynga generated $1.3B revenue, which is 31% more than the year before, while its bookings increased by 38%, and reached $1.5B
In Q3 2020 the company generated $503m revenue and $628m bookings, while in Q3 2019 revenue was $345m, and bookings were $395m
SOURCES: ZYNGA
