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Chart in Focus: Zynga’s Balance Sheet

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Balance sheet strengthened

Zynga (ZNGA) exited 3Q17 with a stronger balance sheet than it had at the beginning of the year with, as its improved cash position helping strengthen its balance sheet.

Zynga reported total assets of $1.92 billion at the end of 3Q17 compared with total assets of $1.91 billion at the end of 4Q16. Although Zynga doesn’t carry any debt, its total liabilities were $298.2 million at the end of 3Q17—lower than its total liabilities of $325.2 million at the beginning of the year.

As a result of rising assets and falling liabilities, Zynga’s shareholder equity rose to $1.63 billion at the end of 3Q17, compared with $1.58 billion at the beginning of 2017.

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Cash balance grew 4.5% sequentially

In 3Q17, Zynga’s (ZNGA) cash balance grew 4.5% sequentially to $772.2 million. Zynga registered a faster increase in its cash balance than several of its industry peers between 2Q17 and 3Q17.

Electronic Arts’ (EA) cash balance decreased 2.7% sequentially in 3Q17, which is the company’s fiscal 2Q18. Take-Two Interactive Software (TTWO), whose fiscal 2Q18 also corresponds with calendar 3Q17, recorded a 1.6% sequential decline in its cash balance.

Glu Mobile’s (GLUU) cash balance decreased 7.6% sequentially in 3Q17, while Activision Blizzard’s (ATVI) cash balance increased 12.5% sequentially in 3Q17.

Financial flexibility

Investors could view the improvement in Zynga’s cash balance favorably, as it suggests improving financial flexibility that would allow the company to invest in more growth. According to Crunchbase data, Zynga has completed only one acquisition so far in 2017, in contrast with the three acquisitions it completed in 2016.

Given that Zynga still relies on the US (SPY) for the vast majority of its revenues, strategic acquisitions could help it stimulate more growth overseas.

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