By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Tech firms have gone to market this year by the bushel with little earnings in tow. Zynga arrives with income aplenty from online games like FarmVille. And Zynga’s profitability is even more bountiful than first appears.

The company has had less time to sow the seeds of growth than its Silicon Valley counterparts. The company was created just four years ago, making it less than half the age of professional social network LinkedIn or online radio service Pandora. And still investors devoured the shares of these profitless dot-com tillers.

Zynga’s initial public offering comes with $91 million of wholesome annual net profit — not the kind genetically modified by creative tech-firm accountants. There are still worries. Most significantly, the bulk of Zynga’s $597 million of revenue last year was harvested from Facebook. In the most recent quarter, it accounted for 82 percent of sales.

That gives the gigantic social network considerable leverage. Last year, Facebook demanded a 30 percent cut of virtual item sales, like tractors, that players use to enhance otherwise free games. Facebook may be tempted to squeeze more from Zynga, but given the symbiotic nature of their relationship also won’t want to milk it dry.

Cultivating new games, and finding those precious few paying players, will be the bigger challenge. Zynga’s games dominate Facebook. They attract about eight times more monthly users than the second most popular developer’s, according to AppData. Zynga is also growing rapidly and acquiring smaller firms — though creativity rarely scales.

That drought hasn’t hit Zynga yet. Sales more than doubled in the first quarter. At the $20 billion valuation being bandied about, Zynga would trade at more than 200 times historic earnings. But when the company sells some virtual goods, like farm equipment, it collects cash up front and recognizes the revenue over the time it expects players to use them. That sounds conservative since customers have already paid and avatars of tractors don’t break. Cash from operations might be a better gauge.

Zynga generated $326 million of operating cash flow last year. Use this figure instead and adjust for the firm’s $1 billion of cash on the books, and Zynga instead would be valued at about 60 times trailing cash from operations. That’s still high, but not outlandish for a firm with growth that’s proving so fruitful.