Zynga has been a fascinating earnings story for the last year or so. Its revenues and bookings keep climbing -- the company's doing great! But it keeps posting these huge losses thanks to two studios it acquired last year doing....extremely well.https://twitter.com/GIBiz/status/1291138720805027841 …
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Basically, Zynga acquired Small Giant and Gram last year with a contingent consideration -- the former owners get money based on how well the acquisitions do over the next few years. Well, both studios are doing so well, Zynga's posting losses in the hundreds of millions.
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This is going to *keep going* into 2021, and Zynga is projecting a net loss of a whopping $550 million for the full year this year thanks to this. Even though, again, Zynga's doing great earnings-wise.
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To add to this, Zynga acquired Peak earlier this year, and that seems to be factoring into it increasing its projected full-year net loss, and it also just acquired Rollic today, which hasn't been factored in. Will be *very* interesting to see if these deals turn out similarly.
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W odpowiedzi do @duckvalentine
Surely the contingency should never outweigh the companies contributions to the portfolio; is this some horrible revenue based return for the founders destroying low margin biz?
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W odpowiedzi do @mobSil
I admit I don't *fully* understand the situation here (nor has Zynga disclosed the terms) but it seems like both portfolios are doing just WILDLY better than Zynga expected in the terms it gave the companies.
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W odpowiedzi do @duckvalentine @mobSil
Like, last quarter, Zynga expected a net loss of $25 million from these alone. It got a net loss of $120 million.
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W odpowiedzi do @duckvalentine
I wonder if theres some creative accounting here, bundle anything u can against these line items: investors are receptive to losses if they have an expiry date...
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They are, but it seems tentatively like Peak might have a similar deal going on, so if that keeps growing those net losses, and then if Rollic causes a similar situation, eventually investors are going to be like hey, what gives
Wydaje się, że ładowanie zajmuje dużo czasu.
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