By Sven Grundberg,, Telis Demos and Ben Fox Rubin
King Digital Entertainment PLC, the maker of the popular "Candy Crush Saga" smartphone game, said Tuesday that it
filed for an initial public offering of up to $500 million on the New York Stock Exchange.
The company hasn't yet decided on an IPO price or stock-market valuation, people familiar with the matter said. But
the company is aiming for a multiple of earnings on par with gaming companies such as Electronic Arts Inc. and
Activision Blizzard Inc., a person familiar with King's thinking said. That could peg the company at roughly $8 billion
to $10 billion, depending on what investors predict for next year's earnings.
King intends to apply to list on the NYSE under the symbol "KING."
King, with offices in London and Stockholm, has risen to prominence amid the rapid rise of phone-based games for
Apple Inc.'s iPhone and phones running Google Inc.'s Android operating system.
King is best known for it hugely popular and profitable Candy Crush game, which was launched on Facebook Inc. in
April 2012. The game has been leading top-grossing games charts and has been one of the most frequently downloaded free
apps from the iPhone's App Store and Google's Play.
The company said it intends to allow some of its shareholders to sell into the IPO, according to the filing. About
half of the company is owned by Apax Partners, a European private-equity firm, and 10% by Riccardo Zacconi, co-founder
and chief executive. Another 8% is held by venture-capital firm Index Ventures.
In its filing, King said the company has posted enormous growth in a few short years. In 2013, the company reported
a profit of $567.6 million, up from $7.8 million in 2012. Revenue jumped to $1.88 billion, up from $164.4 million.
By comparison, Zynga Inc., another top games maker, had revenue last year of $873 million, while Finland'sSupercell Oy reported revenue of $892 million. In October, Japan's SoftBank Corp. bought a 51% stake in Supercell for $
1.5 billion, the largest-ever investment in a mobile game company.
Revenue in $ thousands 2010 2011 2012 2013
King 58,448 63,901 164,412 1,884,301
Supercell 200 101,000 892,000
Zynga 597,459 1,140,100 1,281,267 873,266
King, founded in 2002, has been around longer than both Zynga and Supercell. Candy Crush--a colorful and addictive
puzzle game that reaps revenue from in-game "power-ups"--is being played by 93 million people every day, and is played
more than a billion times every day, King said in its filing.
King said its mobile games have been installed 500 million times in total, from the launch of its first mobile
game, "Bubble Witch Saga," which it released for mobile phones in the summer of 2012.
The big question: How sustainable is that growth?
Overshadowing any King IPO will be the Zynga's experience, which listed in 2011. Zynga shares have performed poorly
since their debut, falling more than 50%, as investors question whether it will be able to reliably produce hit games
for mobile devices like it previously did for Facebook.
The company's revenues fell over the course of 2013, and the company has been posting losses for three years
King will likely face investor questions about what differentiates it from Zynga, and how it can continue to match
the fickle tastes of mobile gamers.
In its filing, King acknowledged "a small number of games currently generate a substantial majority of our
revenue." Specifically, in the fourth quarter of 2013, its top three games--Candy Crush, "Pet Rescue Saga" and "Farm
Heroes Saga"--accounted for 95% of its total gross bookings, it said. Candy Crush, in particular, accounted for 78% of
its total gross bookings.
"If the gross bookings of our top games, including Candy Crush Saga, are lower than anticipated and we are unable
to broaden our portfolio of games or increase gross bookings from those games, we won't be able to maintain or grow our
revenue, and our financial results could be adversely affected," the company said in its filing.
Though hit titles can be fleeting, the mobile gaming business still offers significant opportunity. Mobile and
tablet games globally were estimated to have produced revenue of $12.2 billion last year, according to EMarketer Inc., a
market research service. That would be a 34% jump from 2012.
And recently, King showed it is no one-hit wonder. Last year, it launched a new game, "Papa Pear Saga," that joined
Candy Crush in the 10 most-downloaded apps for Apple devices in December, according to AppAnnie, which tracks app
downloads and revenues.
King said it chose J.P. Morgan Chase & Co., Credit Suisse Group AG and Bank of America Merrill Lynch to take top
roles in the IPO.
Write to Telis Demos at email@example.com and Ben Fox Rubin at firstname.lastname@example.org
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