Cost of revenue accounted for 32% of expenditures
With Zynga (ZNGA) hitting profitability milestones in its recent quarters, its cash holdings have grown. With its upcoming 4Q17 results, it becomes important to find out how the company is spending its cash and what might come out of that spending.
Zynga’s cash holdings increased $51.8 million between 1Q17 and 3Q17. That’s significant since it reported losses in three of the last five quarters.
In 3Q17, running Zynga cost $204.6 million. The company’s largest expenditure in the quarter was the cost of revenue, which was $65.9 million, representing 32.2% of its total costs and expenses. Cost of revenue represented 27.4% of total expenses in 3Q16.
Marketing spending rising as R&D spending moderates
A look at Zynga’s marketing and R&D (research and development) cost trends reveals a much more interesting story. Over the last five quarters, Zynga seems to have moderated its R&D spending while slightly ratcheting up its marketing spending.
Zynga’s marketing budget expanded to $53.9 million in 3Q17, from $51.2 million in the prior quarter and $49.8 million in the year-ago quarter.
In contrast, its R&D budget was $61 million compared to $64.6 million in the prior quarter and $73.9 million in the year-ago quarter.