The company that brought the world the addictive puzzle game Candy Crush Saga is hoping that investors will line up for a piece of its stock as well.
The game maker, King Digital Entertainment, filed on Tuesday for an initial public offering in the United States. The company has reported enormous growth in its revenues, but prospective investors may be wary of players’ tiring of paying to match virtual pieces of sugar.
The company, which is based in Ireland but counts London and Stockholm as important bases, is now betting that its explosive growth in revenue and profitability will help it attract a multibillion-dollar valuation. (It filed confidentially for an I.P.O. last year.)
Related Linkst King is the latest in a number of European social game makers that have become fast-growing global champions. Supercell, the Finnish company behind the Clash of Clans and Hay Day franchises, raised $1.5 billion last year from SoftBank of Japan, at a valuation of around $3 billion.
And Wooga, a Berlin-based start-up, has created a string of social gaming hits like Jelly Splash that continue to top the charts on both Apple’s iTunes Store and Google Play.
But King is the biggest and best known, a company nearly 11 years old that was already mostly profitable by the time Candy Crush made its debut in 2012. That game, in which players try to line up three or more matching types of candy, has become one of the biggest successes since Rovio’s Angry Birds franchise first took flight.
Though the company set a $500 million fund-raising target in its prospectus, it will most likely seek to raise significantly more. It isn’t for survival: In the regulatory filing, the game maker noted that it did not need to raise capital, but could use its newly public stock to make acquisitions.
The I.P.O. filing laid bare how much of a moneymaker Candy Crush has been for its parent. The company said that its profit surged significantly last year, to $567.6 million from $7.8 million. Revenue climbed enormously as well, to nearly $1.9 billion.
Candy Crush, in which players try to line up three or more matching types of candy, has an average of 93 million users a day.
Candy Crush, via Associated Press
Candy Crush, in which players try to line up three or more matching types of candy, has an average of 93 million users a day.
In its filing, the game maker disclosed that it has 128 million daily active users, some of whom spend big amounts of real money to buy lives or special tools.
Candy Crush contributed the vast majority of that number with an average of 93 million users a day. It remains the second-highest-grossing app on Apple’s App Store as of Tuesday, behind Clash of Clans.
Other popular games from King include Pet Rescue Saga and Farm Heroes Saga.
Despite the rapid successes of these European companies, analysts and investors fret that the gaming start-ups remain reliant on a small number of hits.
Share prices have slumped at American rivals like Zynga, which went public in 2011, as investors raise concerns that the companies will not be able to create new gaming franchises that will keep consumers entertained.
Some investors may be concerned that King could suffer the same fate. The company said that its top three games made up 95 percent of its total gross bookings.
“These companies are reliant on hits,” said Mark Little, a tech analyst at the research firm Ovum in London. “Social gaming hasn’t been in the mainstream long enough to know how users will respond to new games that are brought to the market.”
The company’s gross bookings and revenue declined in the fourth quarter of 2013, in part because of a decline in the Candy Crush business. King emphasized that it expected its blockbuster hit to contribute less to its overall sales over time.
JPMorgan Chase, Credit Suisse and Bank of America Merrill Lynch are leading the underwriting of the I.P.O.
No comments:
Post a Comment