Why did Big Fish Games just issue a special dividend to employees?

It is a bit unusual for a privately-held technology company to issue dividends to employees and shareholders. But that’s exactly what is going on at Big Fish Games, the Seattle maker of casual games.

We heard rumblings of the special payment last week, but couldn’t nail down particulars. Now, Tricia Duryee at All Things D has dug up more details, reporting that 75 percent of staffers received checks and some longtime employees pulled down more than $100,000.

It is unclear why a dividend would be issued at this juncture, but Duryee notes that it indicates that the company is “flush with cash.” (I was told that non-employee shareholders also were in line to get the dividend).

CEO Jeremy Lewis declined to comment. The company raised $83 million in venture capital just before the economic meltdown in 2008, and in more recent months it has been discussed as a possible candidate for an initial public offering. (Why the company would take cash off its books before an IPO is a bit perplexing, however, so if anyone has a clue please let me know).

Founded by former RealNetworks employee Paul Thelen in 2002, Big Fish now employs about 500 people.

Big Fish has not grown as quickly as social media gaming powerhouse Zynga, which boasts 232 million monthly users, more than 2,200 employees and revenue last year of $597 million. However, it is said to be bigger — at least in terms of revenue — than Seattle’s PopCap Games which was sold to Electronic Arts for up to $1.3 billion earlier this year.

In September, Big Fish appointed former Amazon.com executive David Stephenson as chief financial officer.

Curious, do you think the dividend signals something bigger at Big Fish?

  • Guest

    Congratulations to the “Big Fisherman” on their big payday!

  • Guest

    It is certainly not typical for a tech company or start-up to pay dividends.  In fact, we see even the biggest of the tech titans such as Microsoft, Apple and Google sitting on billions of Dollars without raising or paying out a dividend.  Thus, this is a very interesting development for a company like BFG. 

    It is possible that they are generating some excellent cash flow (high customer lifetime value numbers, strong sales on iOS, etc.) that they have not been deploying capital except in hiring and some international expansion, which is now an older story – they have not made any publicized acquisitions since 2008. 

    Also, when in 2008 BFG landed a large infusion of money at the height of the financial crisis (purportedly as a safety cushion) it still must have come with an expectation that there would be return within the typical 4 years of VC funded incubation before an exit.  3 years later and BFG must be showing some strong numbers to want to satiate the investors (employees included) with a pre-exit (e.g. IPO or acquisition) incentive that still won’t take away from the cash flow generating capabilities of the company.

  • @knakao

    If they have a lot of cash in the bank, some of their investors may have requested a dividend in the face of a delayed exit event. If that is the case, they may have wanted to do this fairly for both preferred and common shareholders giving a payout to employees as option holders of common. I have no inside information just raising a possible scenario.

  • WolfenRainDancer

    How weird since many of their long term customers are questioning many of their decisions, and are extremely unhappy with things that have been coming down the pike, as reflected by the latest Deluxe Edition debacle.  Many are still not over the Big Green Monster of a game manager that took months to settle down.  I have heard from many who believed they were on the downslope…if your customers lose faith in you, and it appears this is happening, then you have to wonder why they would choose to do this.   The Big Fish that we once knew is not the same company as it is today, and some of their changes have not set well with their customer base.  We are all listening and waiting to see what is going on.

    • elde

      I don’t think there is anything weird in doing so. Since it’s a privatly owned company and management chooses to appreciate the hard work of their employees…good for them!  I’m a customer of BFG and have been a happy customer for many years, so I can only assume your statement is yours and yours only Wolfenraindancer. BTW That Big Green Monster (as you call it) has always been very nice to me…….