Good day, ladies and gentlemen, and welcome to the Zynga’s Third Quarter 2013 Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today’s conference is being recorded.
I’d now like to turn the call over to Krista Bessinger.
Thank you, Jamie and good afternoon. Welcome to all of you who are joining us either by phone or webcast. On behalf of the entire Zynga management team, I would like to thank you for spending time with us this afternoon. We have with us, our Chief Executive Officer, Don Mattrick; and Mark Vranesh, Chief Financial Officer.
Before we begin, please note that we’re targeting a 45 minute call today with approximately 25 minutes of prepared remarks followed by 20 minutes of Q&A. As a reminder, if you have follow-up questions, please contact Zynga investor relations at firstname.lastname@example.org.
I’d also like to remind you that during the course of today’s call, we will make forward-looking statements related to among other things, our outlook for Q4 and 2014 and our operational plans and strategy. These forward-looking statements are typically preceded by word such as we expect, we believe, or similar statements.
Actual results may differ materially from the results predicted. Factors that could cause or contribute to such differences include changes in our relationship with Facebook or the Facebook platform, the ability of key games to sustain or grow bookings, our ability to launch new games in a timely manner that are successful and possible changes in management or corporate strategy.
More information about factors that could affect our results is included under the caption, Risk Factors in our Form 10-Q and elsewhere in our SEC filings. Also I’d like to remind you that during the course of this call, we’ll discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the tables in the press release and on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results.
This conference call is being webcast on the Internet and is available through Zynga’s Investor Relations website. An audio replay of this call will also be available on our website in a few hours.
With that, I’d like to invite Don Mattrick, Zynga’s Chief Executive Officer to open the call.
Don A. Mattrick
Thank you, Krista, and welcome to everyone joining us on our Q3 conference call. Today we will give you a highlight of the Company’s quarterly financial performance and provide an update on the progress we’ve made towards our transition. I will then turn it over to our CFO, Mark Vranesh, to go deeper on operational performance and financials. We will end the call with a few closing comments on how we’re viewing the market and our long-term opportunities before turning it over for questions.
Throughout my first quarter at Zynga, I’ve been impressed by the team’s desire to get back to a strong leadership position. We’ve an incredible opportunity to build new muscle, embrace new practices and create bold ideas that will contribute to the growth of our market. Our aspirations are to excel in content, build network value, to develop technology that benefits customers and to drive efficiencies in our business.
I’m pleased to announce that in Q3 we delivered financial results above the high end of our guidance range. We generated $152 million in Q3 bookings, which exceeded the guidance range of 125 to 150. We delivered adjusted EBITDA from $7 million in Q3, which was also above our guidance range of negative $30 million to break even.
In addition to our solid quarterly performance, I’m excited to share that we’re expecting to be profitable for the full year on an adjusted EBITDA basis. We are seeing sightlines to growth and I’m proud of the progress we’re making to compete more aggressively on the web, make our move to mobile and develop new hits.
As we gear up for fiscal '14, our teams are developing strategic plans to achieve top line growth with a focus on increasing customer satisfaction, margins and cash flow over time. We look forward to sharing further details on these plans in the future.
I’ve spend time with our leaders to evaluate the most important aspects of our business and we’ve developed a set of commitments to align our organizational structure and create a steady foundation for growth. The five commitments we’re focused on are grow and sustain top franchises, create new hits, move to mobile, prove out the Zynga network, and drive efficiency.
In Q3 we also made changes to our executive structure in order to get senior leaders closer to important product initiatives and drive increased accountability. We are making good progress on strengthening our teams and bringing in strategic new hires.
To that end, today we announced that Clive Downie will be joining us as Chief Operating Officer, effective November 4. With more than 20 years of industry experience Clive most recently served as Chief Executive Officer of DeNA West, the American and European division for DeNA, a leader in mobile and social gaming services. Clive has great consumer insight, having spend more than 15 years at Electronic Arts, where he served as Vice President of Marketing, managing some of the world’s most successful entertainment brands including FIFA Soccer, Need for Speed and Medal of Honor.
Clive is a season leader with a deep understanding of consumer entertainment, a unique international perspective and a strong management background in game publishing. All of which are incredibly valuable if Zynga navigates its move to mobile. I’m confident that Clive will bring operational excellence as well as a customer centric point of view to his new role. And I would like to take this opportunity to welcome him to the team.
We believe that these organizational changes will help us sharpen our focus on execution, improve product quality and take a more disciplined approach to the audience engagement. We're also in the process of resetting our product pipeline which includes live games as well as those in development. We believe our core franchises, Zynga Poker, FarmVille and Words With Friends can be evergreen in terms of consumer interest and we are more effectively resourcing these teams with talent from inside the company.
We're focused on growing these franchises and our teams are showing early progress on better execution, predictability, franchise vision and game quality. Our leaders are working to compete more aggressively and to develop thoughtful growth plans to these core assets in fiscal year '14.
In terms of new intellectual property, we're moving through our product reviews carefully to ensure that we make the right decisions for the long term. We're spending more time in the early stages of product development and focusing on testing, consumer satisfaction, audience engagement and monetization.
In order to deliver the best experiences for consumers we are reserving the right to move titles based on where we see heat and interest in the marketplace. We believe this will result in higher quality products, products that consumers will love.
An example of our commitment to high quality products is the Q3 launch of CastleVille Legends, a tablet-first invest and express game which received the distinction from Apple of Editor's Choice. Early indicators tell us that this game retained well among the core audience and we're getting good insights on monetization that will able us to be a lever to bring this intellectual property and others to mobile.
Our teams have done good work and will continue to iterate on the core experience and leverage this intellectual property in the future. We're wiring our organization for success by taking a long-term view on everything we do which will help us create value for our customers, our shareholders and our employees over the next decade.
I would now like to turn the call over to Mark Vranesh to go deeper on operational performance and financials.
Thank you, Don. Good afternoon, everyone. I'm pleased to announce that Q3 bookings and adjusted EBITDA came above our guidance range. We guided to a range of negative $30 million to breakeven for adjusted EBITDA and today I'm happy to report a profit of $7 million. I'll take you through the details across audience and monetization, statement of operations, balance sheet and cash flow and finally our outlook for the remainder of the year.
Before I begin, however, please note that many financial measures herein are expressed on a non-GAAP basis. Be sure to look at our earnings release issued earlier today and available on our website for a reconciliation of non-GAAP measures to the comparable GAAP metrics.
On the game front, as Don mentioned, we are continuing to build new muscle and getting closer to where we want to be. We made a number of new games available in Q3 including Ninja Kingdom, Fairy Tale Twist and Hit it Rich slots on the web and CastleVille Legends on mobile. Of these titles we only invested meaningful marketing dollars in CastleVille Legends in Q3.
As with all new titles in our portfolio, we will evaluate these games for quality and customer engagement and we'll aggressively market when and where we see the potential for at or above market growth.
Now turning to audience, as indicated in our press release, metrics were down due to the lack of new game promotions and declines in older wheel-style games. In addition, we believe Zynga Poker sees traditionally weaker summer seasonality for certain geographies in Q3.
With regard to seasonality more broadly, the industry overall typically sees stronger sales in Q4 around the holidays and in Q1 with new device activations. As Don has mentioned, we are working to position ourselves to benefit from those larger industry trends.
Moving on to monetization, average bookings for daily active user or DAU was up reflecting successful expansions in FarmVille 1 and 2 and the highest quarter ever for ad revenue on a per DAU basis in Zynga's history.
Our advertising business is driving revenue more efficiently as a result of new app products, technology and continued strong demand from advertisers. As a result, ad revenue for DAU was up 33% quarter-over-quarter and 78% year-over-year in Q3.
On the bookings front, our largest franchises exceeded plans across both web and mobile. This resulted in Q3 bookings of $152 million which was above the high end of our guidance range. Web bookings came in better than expected at $106 million as our FarmVille and Zynga Poker franchises exceeded plan.
The FarmVille franchise grew bookings 45% year-over-year. FarmVille 1 sustained a better than expected top line with the launch of a new expansion Mystical Groves and FarmVille 2's introduction of a new feature the River drove improvements across all key metrics including bookings per DAU and engagement on a month-over-month basis when launched in September.
In addition leadership changes in our social casino studio are starting to bear fruit. We saw better than expected results in Zynga Poker due to improved execution and a decrease in the illegitimate credit card activity we faced earlier in the year.
In terms of platform mix, Facebook-related bookings were 65% of the total in Q3 versus 68% in the prior quarter. On mobile, bookings were also ahead of plan at $46 million or 30% of total bookings. Our largest mobile franchise Words With Friends benefited from strong average bookings per DAU related to advertising and saw bookings grow more than 37% year-over-year.
Now let's talk about operating expenses. We are being prudent with cost and well positioning the company for long-term growth. You can see the impact of our expense management flow through results at the end of this quarter. First, people spend was down meaningfully quarter-over-quarter in Q3 due to the first full quarter of savings associated with restructuring announced in early June.
Going forward we are dedicated to improve employee efficiency by leveraging smaller, more focused teams on new intellectual property and redeploying talent through our largest franchises. Headcount in Q3 was 2,206, down 154 quarter-over-quarter and in addition we worked to lower our dependency on outside headcount and services.
With respect to technology related expenses, we've been driving efficiencies in our data centers and laying the foundation for lower tech infrastructure spend going forward. As mentioned earlier in Q3 we were also smarter with our marketing spend instituting a more rigorous ROI focused process that required games to prove themselves before incremental dollars were spent on promotions.
Collectively, these efforts helped drive cash costs and operating expenses down $33 million or 20% quarter-over-quarter. We continue to make significant strides to reduce our cost base and have taken out nearly $200 million of cash cost and operating expenses year-to-date, excluding restructuring charges as compared to the same nine-month period last year.
All of this has resulted in overall profitability for the company with adjusted EBITDA of $7 million in Q3 or a 5% adjusted EBITDA to bookings margin for the quarter. Factoring in depreciation and amortization, interest and tax result in non-GAAP net loss of $16 million or a $0.02 loss per share.
Turning to our balance sheet and cash flow, we have a strong balance sheet with more than $1.5 billion in cash and marketable securities which make up 66% of Zynga's total assets. Cash used in operations in Q3 was $5 million primarily due to changes in working capital and factoring in $1 million of capital expenditures we ended the quarter with negative free cash flow of $6 million.
We also repurchased 2.4 million shares on the open market for $7 million. We are committed to being disciplined with cash and continue to evaluate its best use is to drive growth and long-term enterprise value for Zynga.
That concludes the discussion of our execution in Q3. Now let’s turn to our outlook. I’d like to begin by emphasizing that with all of our focused activity we’re on a path to improving product quality, executing with the greater sense of urgency and looking to meet or exceed market growth in the long-term. That said; we expect to continue to experience downward pressure in the near term as we work through the transition.
There are really two key factors impacting our Q4 outlook. First, we’re in a transition period as Don indicated. Some of our live games are declining and we have factored that into our forecast. Second, we’re working to figure out the best way to bring new games to market and we reserved the right to move titles based on where we see consumer interest. Specifically for Q4 we expect bookings to be between $130 million and $140 million. Adjusted EBITDA between negative $25 million and negative $15 million and non-GAAP loss per share between $0.05 and $0.04 based on a share count of approximately 812 million shares to 822 million shares.
On a GAAP basis, we expect revenue to be between $175 million and $185 million. Net loss between $31 million and $21 million, and GAAP loss per share between $0.04 and $0.03 based on the same share count noted earlier.
Note that in Q4 we’re expecting increased legal expense in the quarter driven by a patent lawsuit brought against us that we expect to go to trial in November. We believe we’ve meritorious defenses to the suit and that the patents should be held invalid. We have been and will continue to be relentless in protecting our creative work and intellectual property.
A few other notes; stock-based expense and capital expenditures for Q4 are expected to be approximately $25 million and $3 million respectively and given our cumulated tax attributes which include net operating losses and R&D tax credits we do not expect to begin paying cash taxes in the U.S. for two to three years.
In summary, I am encouraged by the early results we’ve achieved as we control cost and become more predictable. Given today's Q4 outlook, you can see that we expect to be profitable once again for the full-year and even more importantly we believe we're poised for future growth.
And with that, I’d like to turn the call back over to Don.
Don A. Mattrick
Thank you, Mark. I’d like to reiterate what I said at the start of the call. I am proud of the progress we’ve made and I am pleased with our performance this quarter. Q3 earnings exceeded our guidance both in terms of bookings and adjusted EBITDA and I am encouraged that we’re seeing sightlines to future growth. We’re committed to being a profitable company and we believe we’re poised for growth in 2014.
When I joined in July, I shared my belief that the company has incredible assets that will assist us in taking advantage of the market and I firmly believe that our best days are ahead. We’re at the forefront of an entertainment revolution and an industry with explosive smartphone and tablet growth. Whether you measure it in terms of the numbers of devices or absolute revenue the market will more than double in the next four years with 2.5 billion people approximately one third of the world’s population using smartphones by 2017.
Gaming continues to be one of the most important application segments on mobile globally capturing 55% of all time spent on mobile and 67% of all time spent on tablet. I am excited and feel privileged to compete in a market with such incredible consumer adoption and billions of annual profits up for grabs. At its peak Zynga reached bookings margins of 47% on $393 million in annual profit on an adjusted EBITDA basis.
I am confident that Zynga is rewiring itself in a meaningful way that will strengthen the core of our business and put us back on track to achieve even more significant growth and profits. The most important thing we can do going forward is deliver compelling entertainment experiences that people will really want, value and most importantly love. Entertainment is an excellence business and we have an opportunity to deliver compelling products with the fit, finish and polish that truly engages a mass market audience.
And with that being said operator, we’re happy to open up to questions.
(Operator Instructions) The first question comes from Douglas Anmuth from JPMorgan.
Bo Nam - JPMorgan
Hi, thanks taking our questions, this is Bo Nam on for Doug. So, Don can you elaborate on some of the changes you’ve made to the game development cycle at Zynga and how you think about allocating resources between growing existing franchises across platforms versus new ones and then secondly, can you talk about the game pipelines for 2014 and how many of them will be fully connected and what you think it would take to retool some of your existing titles from multiplatform? Thanks.
Don A. Mattrick
So, the first question was in regards to changes in the game development cycle. So there’s a few things that we’ve done over the past quarter. We’ve spent time flattening the organization so the creative product leads are now reporting directly to me. We’ve spent time strengthening our teams, so applying more people to the products and taking a audience and competitive filter where really what we’re looking for is a breakthrough idea that we can execute on, message to consumers and build great hits going forward. So I’d say its customer centric. There’s a bunch of regular rhythm that we put into product reviews, weekly reviews, marketing, participating, bringing some of his prior expertise, thinking about social and how we can link that to our mass market audience. And I am really seeing the teams get energized, perform and start having exciting visions for the future products that we create. In relation to 2014 we’re in the process of managing our three core franchises with an aspiration of growth being FareVille, Zynga Poker and Words with Friends, and we’re also creating several new products that are in different stages of the development cycle and again I am encouraged by the work that I am seeing in both the existing core products and our go forward pipeline.
Great, thank you. Next question please, operator.
The next question comes from Arvind Bhatia from Sterne Agee.
Arvind Bhatia - Sterne Agee & Leach Inc.
Thank you very much. A couple of questions, what I wanted to see is you could maybe narrow down your guidance, so your color on profitability; previously I think you guys have said 0% to 5% and you hit 5% this quarter. Just I guess, going forward how we should think about that maybe for 2014. And then for the three franchises that as you mentioned, can you give us some color on what they represent today as a percentage, I mean, I imagine it's a bulk but can you give us some more color there? Thank you.
Sure, I’ll take that one Arvind. So with the guidance that we gave today the range for full-year EBITDA margins is 3% to 4%. So I think you should probably think about that for your 2013 model. And for 2014, we’re in the middle of doing strategic planning as we speak and we got more to tell you about in our next phone call. Now with respect to the top three franchises or really top three games, I am sorry; the revenue concentration for Q3 was 59% and we’ll have more disclosure about that in our 10Q when it's filed.
Thank you. Operator, next question please.
The next question comes from Scott Devitt from Morgan Stanley.
John Abraham – Morgan Stanley & Co.
Hi, this is John Abraham for Scott. Just going with those three franchises, I was wondering if you could give us an idea of how much of the user bases are focusing those franchises, it could be helpful as we’re trying to figure out where the user trajectory goes from here if it can kind of slow down the declines or if there's a little further to go, that'd be helpful? Thanks.
Don A. Mattrick
Yes, John, no problem. I think with respect to user base by games we don't disclose that on these calls. There is some industry data out there. I would say that we're proud of the early progress that we've made strengthening these core franchises and I'm talking about FarmVille, Zynga Poker and Words With Friends. So I think you can expect to see some good news coming out of these franchises in the future.
Thank you. Operator, next question.
Our next question comes from James Cakmak from Telsey Advisory Group.
James Cakmak - Telsey Advisory Group LLC
Hi. Thanks. So, Don, you've been there over several months now, can you just talk about any surprises that you've had both positive and negative, anything that you can share? As you go through your product reviews, can you discuss any differences in testing and hurdle rates now versus how the company had done it before? Thanks.
Don A. Mattrick
Thanks, James. I've just effectively finished my first quarter. It's exciting to be here. I see tremendous amount of potential in the business, in the products that the company has created to-date and what we'll be able to create in the future. There's lot of talented and passionate people. I'm getting a lot of expression of interest to have technical leaders, creative leaders, executive leaders, just functional leaders in multiple areas of the business join Zynga, so I look at that as encouraging. We demonstrated what I think is a star hire with Clive moving from his role as CEO to COO to join our team. So there's a lot of interest and I think people are bullish on the macro of our category of what free to play can mean and have a long-term belief that there really are billions of dollars of profit in content, in network and in excellence of execution through your technical pipeline. Zynga has a great culture of building and innovating, so we're just finding a way to land on that, to sharpen it and to really bring senior people closer to the details, to amplify the talent and to play to win. That's the strategy that we're trying to execute on, get excellence, create hits, have it be fun for our consumers, for our staff and I see tremendous opportunity. So one quarter in I'm more excited than when I joined.
Thank you. Operator, next question.
The next question comes from Chris Merwin from Barclays.
Christopher Merwin - Barclays
Hi. Thanks for taking the question. So for Mark, you obviously posted pretty impressive be it [ph] on EBITDA in the quarter but the guidance for the 4Q showed losses of $15 million to $25 million, so is there anything incremental going on, on the cost side in the 4Q that we should be aware of? I know you mentioned the legal expense, but was just curious if there's anything else that was helping to drive this sequential decrease in EBITDA guidance? And then for Don, as you think about the product pipeline going forward and generating efficiencies, are you more open today partnering with other developers and leasing their gains for your network or is the goal obviously still to develop most of the games in-house? Thanks.
Okay. Thanks, Chris. I'll take the first one. Two key things I called out in my guidance section that are I think relevant for Q4 and the fact that we are in a transition period and games are declining – some of our games are declining and we're reserving the right to move titles around and that has to do with our new IP launches, on the cost side, yes, we are going to incur quarter-over-quarter an increase in legal fees, and the other one I would point out is marketing expenses. We'll have a quarter-over-quarter increase in marketing as well.
Don A. Mattrick
Chris in relation to your second question regarding third party games, I wouldn't say that we have had an expression of interest from multiple people to partner, to publish through our business. We've also had strong expressions of interest with IP holders from different companies, different areas. So I'm encouraged both from the development and brand IP side that people recognize the potential of our business and we'll have more news on some smart things in the future.
Next question, please.
The next question comes from Brian Pitz from Jefferies.
Timothy O'Shea - Jefferies & Company
Yes. Hi, Don. This is Tim O'Shea for Brian Pitz. It sounds like you're confident you can turn some of your biggest titles like FarmVille, Zynga Poker and Words With Friends into evergreen franchises. Just wondering what gives you this confidence given that Mark noted in his prepared remarks, you continue to see some declining user metrics across those games. And then just a quick follow-up for Mark, wondering if you had any color on the 10 million impairment charge during the quarter, is that something related to OMGPOP? Thanks.
Don A. Mattrick
Sure. I'll take the first part of the question. I think that we've seen through our products that there is multiple years of interest in the categories that FarmVille, Poker and Words With Friends participate. I really think we have tremendous assets. I think that we're seeing the difference that senior teams can make with more investment, more focus on innovation. And just paying closer attention to what the audience is asking for. So people love these products. They use them each day. They're fun to engage with and they connect people through social engagement. That's what Zynga is about. So I believe those are three examples of top 20 products that will live in the charts for a long period of time. So that's a great opportunity. And Mark, do you want to…?
Sure. Hi, Tim. The write-downs we took were associated with intellectual property we acquired and we're no longer aggressively pursuing, so there is really three small pieces. One small piece was related to OMGPOP. I would call out we don't expect any further write-downs and as part of our quarterly close process, we do review all of our intangibles on a quarterly basis.
Next question please.
The next question comes from Rich Greenfield from BTIG.
Richard Greenfield - BTIG LLC
Hi. Thanks for taking the question. Two parts, I guess first just when you look at – you made a comment about some of the games that are in Q4 beyond your key games showing kind of continued decline and that was factored into the guidance. Just wondering what are the key titles? I know these titles that you're "kind of abandoning", letting them just wind down their life, I'm just trying to understand what you meant by that comment and which are the key titles that it really relates to? And then two, as you look at your competitors like King.com and Supercell overseas, wondering as you look at the D&A of those successful games that they've been able to create that expand both mobile as well as web, what do you think the key is that they have figured out that Zynga needs to in order to kind of regain kind of the preeminence that you had in gaming online before?
Don A. Mattrick
I'll take the latter question first and I'll let Mark speak to the particular title guidance. So I'm really encouraged by what I'm seeing both from Supercell and King. The reason why I'm encouraged is they've created hits. The hits are generating substantial profits, hundreds of millions of dollars. They've been able to do it by coming up with core game loops, core mechanics that really resonate with consumers and it just shows the power of the category. And when I take a look at it and think about what they've been able to accomplish, I know we can accomplish equivalent things in the future; that we have all the resources, all the capabilities that we need, we just need to persist and we will persist and create hits that chart in the top 20. So I see opportunity. I congratulate both Abarca [ph] and Ricardo for the great work that they've done honing their companies by – we use it as a form of competitive benchmarking. It energizes us and it causes us to know that we're doing important work that is being recognized by consumers in creating big pools of profit.
Yes, and with respect to declining games in Q4, I just want to call out
In Q4, I just want to call out -- we mentioned we’re in a transition period and while we won’t go into title by title disclosure on games, we did call out that a lot of the older wheel-style games have been declining.
Thanks, operator. Can we have the next question?
The next question comes from Mike Olson from Piper Jaffray.
Andrew Connor - Piper Jaffray
Hey. This is Andrew Connor on for Mike. Congrats on the profitability. Just really a modeling question, I think you guys mentioned growth in 2014. I’m just curious if that is really on sort of a second half -- off of a second half ’13 run rate? Or if that’s growth off of kind of where you’re looking at for the full 2013, I mean that’s it.
Yes. Hi, Andrews, Mark. Thanks for the question. Right now we are in the middle of our strategic planning process for 2014. We will have more to share with you on 2014, in our next call. But right now it just would be a little too early.
Thank you, operator. Next question please.
(Operator Instructions) The next question comes from Michael Graham from Canaccord.
Michael Graham - Canaccord Genuity Inc
Thanks. I just wanted to go back to the core games for a second. Just to clarify something, you mentioned that Poker which had a little bit of a tough quarter was seasonal and I was just looking back at the last couple of years and it look like Q3 wasn’t quite a seasonal down. So I’m just wondering -- is that because Poker was just growing back then and now we’re starting to see some seasonal things come through and can you shed any light on what you’re seeing so far in Q4? And then the second one is, just in terms of advertising the 37% growth from Words With Friends was really strong. Can you comment on -- is that pricing or is that ad load or just what’s going on there, the usage and that happened in the context of overall ad revenue shrinking year-over-year. So I’m just wondering if you could comment on what was shrinking amidst that growth. Thank you.
Sure. Thanks, Michael. On seasonality in Poker, we have seen seasonality in Poker over the last several years in Q3 primarily around the holidays and in certain geographies. We wanted to mention that in this phone call. And then secondly, with respect to Words With Friends and the strength on advertising, its really a culmination of a few things, better ad platform technology, that we’re using, full quarter a couple of new ad products that we have working for us right now primarily watch to earn video. So there was a couple of things that help drive that number for Words With Friends.
Great. Thank you. Next question please.
The next question comes from Justin Post from Bank of America.
Ryan Gee - Bank of America Merrill Lynch
Yes, hi. This is Ryan Gee calling for Justin. Hi. This is Ryan calling in for Justin. I had two quick questions on mobile. First one is, I was wondering if you guys could break out for us the key drivers of the mobile business be at either advertising or may be even Poker and may be discuss how important those two lines are still to mobile bookings? And then second was on mobile ARPU and how that’s trending if you were to back out advertising and what you guys can do or the steps you’re taking to really drive mobile ARPU up? Thanks.
Yes, I will take that one Ryan. Thanks for the question. So key drivers behind the mobile business today and really sort of the foundation for a lot of what we’ve for 2014 are in our current products for example Mobile Poker and also Words With Friends, which is our largest mobile product. So you can think of those as sort of being the foundation that we’re going to grow from and then obviously what we launch in the way of new intellectual property and new games will drive growth. And with respect to mobile user pay, we’re seeing some pretty incredible signs out there from the companies that Don mentioned -- Don talked about earlier, which gives us a lot of confidence in the direction that we’re taking in mobile right now. So I think that’s giving us the confidence in our 2014 planning.
Thank you, operator. I think we have time for just one last question please.
Our final question comes from Tony Wible from Janney.
Tony Wible - Janney Montgomery Scott
Hi. I was hoping you could break down the unique payers by mobile versus desktop and then what you saw in this quarter versus prior quarter and may be a year-ago, just so we kind of track that migration?
Yes. Hi, Tony. That’s not a metric that we provided in the past and we would consider that to be somewhat competitive. So I don’t think we will be providing that -- will be able to provide that.
Thank you, operator. I think that’s all the time we have for today. We appreciate everyone participating in the call and we look forward to speaking with you again next quarter. Thank you.
Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.
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