Estimates vs. Consensus: Mostly inline to the Street We are slightly above the street on revenue at $189mn vs. $188mn, but in-line on EBITDA at $20mn. Cost cutting could improve EBITDA and Zynga has restructured some of its workforce and is focusing on driving more engagement with live events in its game franchises. For 2017, we are below the Street on revenue at $779mn vs. $805mn, but above on EBITDA at $101mn vs $99mn. Table 33: Zynga Estimate Summary 1017 2Q17 2017 2018 Revenue BofA ML est. $189 $196 $779 $786 Growth Y/Y% 41% 41% 5% 1% Street $188 $200 $805 $875 BofA ML vs Street Above Below Below Below EBITDA BofA ML est. $20 $20 $101 $106 Street $20 $24 $99 $122 BofA ML vs Street Above Below Above Below EPS BofA ML est. $0.01 $0.01 $0.05 $0.06 Street $0.02 $0.02 $0.07 $0.08 BofA ML vs Street Below Below Below Below Source: BofA Merrill Lynch Global Research estimates, company report Zynga is improving profitability while engaging players better with live services but we remain cautious on the company’s ability to materially grow its audience and still favor the console gaming group. Zynga should have downside support given roughly $1.50 in cash and assets and strategic franchise value (we estimate Poker/Slots generates over $250mn+ in revenue annually}. Our $2.70 PO is based on 11x 2018E EBITDA (which is a premium to the Mobile gaming peer group due to margin expansion potential}, plus $1.41/share in cash and assets (building). opera Internet/e-Commerce | 06 April2017 = 51 HOUSE_OVERSIGHT_014937