Wednesday 28 September 2016

Candy crushed! King Digital shares plunge after profit warning

Published 15/05/2015 | 07:37

candy crush
candy crush

King Digital Entertainment shares fell as much as 14.3pc in after-market trading on Thursday, after the "Candy Crush Saga" creator said it expects changes in foreign currency and a lack of new releases to hurt its gross bookings for the current quarter.

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King, a maker of games for social media platforms and mobile devices, forecast second-quarter gross bookings of $490 million to $520 million, and said the mid-year period would be "seasonally softer", although it expected to return to growth trends in the latter part of the year.

The dollar .DXY has surged about 9 percent against a basket of major currencies in the first three months of the year.

The company's first game launch of 2015 would come in the back half of the year, Chief Operating Officer Stephane Kurgan said, adding that King expected "...some softening of our bookings as a result."

The upcoming launches will stabilize and then reverse the bookings trend in the latter part of the year, Kurgan said on a conference call.

The weak forecast overshadowed the company's strong first-quarter results.

King Digital, which went public in March last year, said net income rose to $164.1 million, or 51 cents per share, in the first quarter ended March 31, from $127.2 million, or 41 cents per share, a year earlier.

On an adjusted basis, the company earned 61 cents per share, well above the average analyst estimate of 53 cents, according to Thomson Reuters I/B/E/S.

Revenue fell 6.1 percent to $569.5 million, but beat the average estimate of $563.4 million.

Total gross bookings, an indicator of future revenue, rose 3.1 percent to $604.5 million in the first quarter compared with the fourth quarter of 2014.

Analysts on average had expected bookings of $589.7 million, according to market research firm Factset StreetAccount.

Rival Zynga reported higher-than-expected bookings earlier this month, due to the popularity of titles such as "Words With Friends".

King Digital records sales of virtual goods, such as coins, as deferred revenue, which is recognized as these goods are redeemed or used. Bookings equal revenue recognized in a period plus the change in deferred revenue.

The company's shares were down 11.2 percent at $13.30 in extended trade.

Reuters

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