Zynga Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Zynga's fourth quarter and full year 2020 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Rebecca Lau, Vice President, Investor Relations and Corporate Finance. Please go ahead, ma'am.

Thank you, Josh, and welcome everyone to Zynga's fourth quarter and full year 2020 earnings call. On the call with me today are Frank Jabot, our Chief Executive Officer, and Jared Griffin, our Chief Financial Officer. Shortly, we will open up the call for live questions. Before we cover the safe harbor, please note that in an effort to keep our team members healthy, each member on today's call is dialed in remotely. We appreciate your understanding during the call and hope that everyone is staying safe during this time. During the course of today's call, we will make forward-looking statements related to our business plan and strategy, as well as expectations for our future performance. Actual results may differ materially from the results predicted. Please review the risk factors in our most recently filed Form 10-Q, as well as elsewhere in our SEC filings for further clarification. In addition, we will also discuss non-GAAP financial measures. Our earnings letter, earnings slides, and when filed, our 10-K will include reconciliations of our GAAP and non-GAAP financial measures. Please be sure to look at these reconciliations as the non-GAAP measures are not intended to be a substitute for or superior to our GAAP results. This conference call is being webcasted and will be available for audio replay on our investor relations website in a few hours. Now I'll turn over the call to Frank for his opening remarks.

Thank you, Rebecca. Good afternoon, everyone, and thank you for joining our Q4 earnings call. 2020 was an unprecedented year of uncertainty, loss, and change. It was also the year when more people than ever before turned to games for entertainment, social connection, and a sense of community. I could not be more proud of how Zynga has responded to the challenges of the global pandemic with focused execution, strong teamwork, and delivering high-quality live services to our players. Our team seamlessly transitioned to work from home in early March and continued to deliver on our mission to connect the world through games while achieving one of the strongest performances in Zynga history. Our execution in Q4 and throughout 2020 has added meaningful scale to our live services platform, expanded our global footprint, and strengthened our position as one of the leading mobile game publishers in the world. Q4 capped off a truly transformational year for Zynga. In the quarter, we achieved our highest revenue of $616 million of 52% year-over-year, and record bookings of 699 million, up 61% year over year. Our results were well ahead of guidance across all key financial measures, led by an all-time best revenue and bookings quarter for Words with Friends. In addition, we delivered record Q4 performances by Empires and Puzzles and CSR2, as well as our social slots and casual cards portfolios. Building upon its successful launch in September, Harry Potter Puzzles and Spells continued to gain momentum as players engaged with its highly social and innovative gameplay. Advertising in Q4 was also a key growth contributor, driven by strong seasonality and advertising yield, as well as an excellent performance from Rollick in its first full quarter at Zynga. In 2020, strong organic growth across our live services, coupled with contributions from our acquisitions of Peak, and Rolick drove our highest annual revenue of $1.97 billion of 49% year-over-year and record bookings of $2.27 billion of 45% year-over-year. We also generated our best-ever annual operating cash flow of $429 million of 63% year-over-year and added $794 million in net proceeds through a convertible notes offering in December, ending the year with approximately $1.57 billion of cash and investments. Execution of our multi-year growth strategy has driven our tremendous results to date, while providing strong momentum for additional growth ahead. In 2021 and beyond, we are focused on continuing to drive recurring growth from our live services foundation and launching new titles from our exciting new game pipeline. In addition, we are investing in new transformational growth opportunities based on key megatrends within interactive entertainment. These initiatives include our investments in hypercasual games, cross-platform play, international expansion, and building an advertising network, all of which have the ability to meaningfully increase Zynga's total addressable market while adding new capabilities to further grow our business. First, we are continuing to drive recurring growth from our live services foundation. One of Zynga's core competitive advantages is our ability to create forever franchises that are highly engaging and can predictably deliver sustainable growth over long periods of time. A great example of this is Words with Friends. In 2020, the franchise delivered its best ever annual revenue and bookings performance in more than 11 years since its launch in 2009. A key driver of this performance was our steady release of new bold beats, including an innovative rewards path, which gives players themed paths to play and rewards to unlock. Looking ahead, we are entering 2021 with a much larger and more diverse portfolio of live services, now anchored by eight forever franchises, including CSR Racing, Empires and Puzzles, Merge Dragons, Merge Magic, Toon Blast, Toy Blast, Words with Friends, and Zynga Poker. We are focused on executing our bold beat strategy across our portfolio and are confident in our ability to drive recurring growth collectively across our live services. second we are launching new titles from our exciting new game pipeline our goal is to create new forever franchises to add to our live services portfolio and our latest release harry potter puzzles and spells is off to a great start and will be a meaningful growth contributor in 2021 and beyond coming up next from our new game pipeline are puzzle combat and farmville 3. both titles have been progressing well in soft launch and are on track to release worldwide in the first half of 2021. We also expect our first Star Wars game to enter soft launch in early summer with the potential to release by the end of the year. Going forward, we expect new games to be a meaningful growth driver and have additional games in development at Natural Motion, Graham Games, Small Giant, Peak, and Zynga Studios. Third, we anticipate hypercasual will be one of the fastest growth opportunities for Zynga. Hypercasual games are highly accessible, driven by simple concepts that are easy to play, and appeal to large and diverse audiences of players, many of whom may be first-time mobile gamers. With our acquisition of Rollick, we ended 2020 with three of the top 50 downloaded US iPhone games, and so far in Q1, two of our new hypercasual titles, High Heels and Blob Runner 3D, have already reached the number one and number two top downloaded US game positions on Android and iOS. In 2021 and beyond, we will build on Rolex momentum and expect this new hypercasual audience to supercharge Zynga's live services platform by meaningfully expanding our user acquisition funnel, cross-promotion opportunities, and advertising inventory. Fourth, we are actively developing cross-platform play games, which will further expand our total addressable market. Gamers have been excited to seamlessly play across mobile PCs and consoles for a long time, and recent innovations in technology, including 5G, make this a reality. Today, many of the largest interactive entertainment properties in the world are free-to-play cross-platform play experiences. Zynga is well positioned to successfully enter this category because one, we have iconic licenses and brands. Two, our teams have strong multi-platform experience. Three, we are already using proven cross-platform play tools and technologies such as Unity, Unreal, and AWS. And four, we have over a decade of experience building and operating free-to-play live services. Executing on this opportunity has the potential to meaningfully increase our total addressable market and drive stronger top line and overall operating margins. Fifth, we are expanding our live services portfolio in international markets and see this as a tremendous growth opportunity. In 2020, we grew our international revenue in bookings to their largest scale in Zynga history. A key driver of this performance was our growth in Asia. where we continue to enhance our ability to self-publish titles, including Toon Blast, which was the most downloaded game in Japan on Android in 2020, and Empires and Puzzles, which continued to perform well throughout the year. More recently, Harry Potter Puzzles and Spells is showing positive engagement in Japan and South Korea. Over the coming years, we see more opportunities to expand into international markets as we execute on our growth strategies. Sixth, we are investing in new technologies and solutions to build an advertising network. At the core of Zynga's live services platform is our first-party data network, which captures key insights about how our players are interacting with our games. We use this data to deliver highly engaging interactive experiences for our players, optimize our user acquisition, and determine how best to monetize our games, including advertising. In Q4 2020, we more than doubled our average monthly mobile active users year over year to 134 million, significantly expanding our first-party data network and player insights. This increased audience scale coupled with our diversified portfolio of live services and best-in-class data science capabilities gives us every confidence in our ability to navigate upcoming privacy changes and to continue to grow our advertising business. Furthermore, by building an advertising network, we will unlock more value from our portfolio games and capture more of the economics in the mobile advertising ecosystem. Overall, Zynga is uniquely positioned to capitalize on key megatrends in interactive entertainment by executing on our growth initiatives of live services, new game development, hyper-casual games, cross-platform play, international expansion, and building an advertising network we see an organic opportunity to more than double the value of our company. Finally, we see more opportunities to acquire talented teams, technologies, and franchises to further expand our capabilities and accelerate our growth. We have a strong track record of executing accretive acquisitions, including Graham Games, Small Giant Games, Peak, and Rollick, which have each strengthened our life services platform and demonstrated our ability to collectively grow faster together. Looking ahead, we see more opportunities to continue to be a leading consolidator and a destination of choice for developers in this dynamic interactive entertainment industry. I am extremely excited for Zynga's next phase of growth, and I'm confident in our ability to generate more value for our players, teams, and shareholders over the long term. With that, I would now like to turn the call over to Jer to discuss our results in more detail as well as our outlook for the coming year.