Zynga Inc. filed for an initial public offering Friday that has the social gaming company seeking to raise as much as $1 billion from investors to continue to build out its booming business.

In a filing with the Securities and Exchange Commission, Zynga didn't spell out a proposed offering-price range or number of shares to be included in the deal. The company also didn't specify on which exchange it intends to list its shares.

If completed, Zynga's IPO would be the latest debut of a high-profile online social-networking company this year. LinkedIn (LNKD: 93.70, 3.04, 3.35%) completed its IPO in late May, and Groupon Inc. has since filed its own papers for a deal expected to be executed later this year.
Facebook games maker Zynga filed to raise as much as $1 billion in an IPO, pulling back the curtain on its financials and showing how fast its profits have grown.

Facebook is widely expected to make its own public offering next year.

Zynga, which makes popular Facebook games such as "FarmVille" and "CityVille," saw revenues surge nearly 400% to $597.5 million in 2010 and reported a net profit of $90.6 million for the year. Earnings for the first quarter of this year were $11.8 million on revenue of $235.4 million putting the company on track to surpass the $1 billion mark in revenue this year.

Monthly active users as of March 31 totaled 236 million flat with the same period the previous year and up 21% from the end of December.


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Zynga noted that it spreads out the recognition of revenue from the sale of virtual goods. Bookings represents the total value of revenue earned in a period; the company said bookings totaled $286.6 million in the first quarter compared to reported revenue of $235.4 million for the period.

In a letter attached to the filing, CEO Mark Pincus said the San Francisco company would "continue to make big investments in servers, data centers and other infrastructure" to keep building out games.

"We believe we will maximize long-term shareholder value by delivering long-term player value. This means we will make decisions and trade-offs that are different from other companies. We will prioritize innovation and long-term growth over quarterly earnings.

"We will not," he added, "make short-term decisions that sacrifice our core values or veer from our long-term vision."

The company also noted in its filing that it generates "substantially all" of its current revenue through the Facebook platform. Much of this is through the sale of virtual goods using Facebook's credits payment system, of which Facebook retains a 30% cut. The relationship with Facebook was listed as the No. 1 risk factor in Friday's filing.

In the first quarter this year, in-game transactions made up about 95% of total revenues for the period, with the remainder coming from advertising, according to the filing.

Zynga also noted that a majority of its revenue comes from a small percentage of its player base. Zynga games are free to play and only generate revenue through micro-transactions and advertising.

The company also said a majority of its revenue comes from "a small number of games." Zynga's four largest games "CityVille," "Empires & Allies," "FarmVille" and "Texas Hold'Em" accounted for about three-quarters of the company's total monthly active users, according to data from AppData.

Morgan Stanley and Goldman Sachs are named as the lead underwriters of the offering, with B. of A. Merrill Lynch, Barclays Capital, J.P. Morgan and Allen & Co. also participating.