'Candy Crush' decline continues for King, shares fall
SAN FRANCISCO (Reuters) - Social and mobile game company King Digital Entertainment Plc reduced its 2014 forecast after reporting lower-than-expected second-quarter revenue on Tuesday, as gamers continued to spend less money on its "Candy Crush Saga" game.
King also announced a $150 million special dividend, or 46.9 cents per share, payable to shareholders of record on Sept. 30. Its shares, however, slipped 22 percent in after-hours trading after closing at $18.20 on the New York Stock Exchange.
The company, which went public in March, said it has reduced its 2014 forecast and expects gross bookings in the range of $2.25 billion to $2.35 billion from its previous estimate of $2.55 billion to $2.65 billion.
"We have seen a step down in monetization in the latter part of Q2 and so we have adapted the view forward," Chief Executive Officer Riccardo Zacconi said in an interview.
Investors have worried that unless King delivers a set of consistent and long-lasting hits, apart from "Candy Crush Saga," it might suffer the same fate as "Farmville" maker Zynga Inc and "Angry Birds" developer Rovio Corp, which are struggling to retain players.
King's second quarter gross bookings, an indicator of future revenue, was $611 million, up 27 percent from the year-ago period, but less than the last quarter when it reported gross bookings of $641.1 million.
King has yet to see its other titles such as "Farm Heroes Saga" and "Bubble Witch 2 Saga" fully offset user losses of its "Candy Crush Saga" puzzler game that accounted for about 60 percent of second-quarter gross bookings.
"We expect 'Candy Crush' will decline, but have a very strong tail and a long tail," Chief Financial Officer Hope Cochran said in an interview. "We will be launching the 'Candy Crush' sister title in Q4, which will give more longevity to that title."
The company reported revenue of $594 million for the second quarter ended June 30 compared with $456 million in the year-ago period. This fell short of analysts' expectations of $608.3 million, according to Thomson Reuters I/B/E/S.
It reported second-quarter net income of 52 cents per share compared with 39 cents per share in the year-ago period, and surpassing analysts' estimate of 49 cents per share. Non-GAAP earnings were 59 cents per share, which was in line with analysts’ expectations, according to Thomson Reuters I/B/E/S.
The company also said on Tuesday that it had acquired Singapore-based mobile game studio Nonstop Games for $6 million in cash upfront, and would pay $74 million over a four-year period if it reached certain revenue targets. Certain employees of Nonstop, which recently released strategy game "Heroes of Honor - War of Kings" for iOS devices, were given $10 million upfront, the company said.
(Reporting by Malathi Nayak. Editing by Andre Grenon)
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