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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
“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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
“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.”<\/p>\n
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.<\/p>\n
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\u2019 expectations, according to Thomson Reuters I\/B\/E\/S.<\/p>\n
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.<\/p>\n
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