King Digital Entertainment Plc (NYSE: KING)
King digital, the maker of interactive games posted earnings on August 13th, 2015 which fell short of analysts’ expectations. The company produces many popular games such as Pet Rescue Saga, Candy Crush Saga, and Farm Heroes Saga. The company, based in Dublin, Ireland has seen its shares trade wildly in recent action during trading sessions leading up to the announcement. For example, on August 6th, its shares traded suddenly intraday from a high of $15.73 down to a low of $13.11 before closing at $15.00. Whether someone somewhere gained early knowledge of a poor pending earnings report or not, that activity was wild and caught the attention of many active daytraders.
King Digital “reported a quarterly profit of $119.3 million, or $0.38 per share, versus a year-ago profit of $165.4 million, or $0.52 per share. Excluding one-time items, the company’s earnings came in at $0.49 per share. Its revenue declined 17.5 percent year-over-year to $489.5 million. However, analysts were expecting earnings of $0.43 per share on revenue of $490.03 million. The average estimate among 22 Estimize users was for earnings of $0.46 per share and revenue of $525.49 million.“
King wound up closing the regular trading session at $15.20. After the report, shares were down -$1.39 or 9.14 percent to $13.81.
Competition & CEO Comments
King’s main competition, which is Zynga Inc., known for their popular game FarmVille and Mafia Wars also recently forecast poor quarter bookings which were well below estimates.
King’s CEO Riccardo noted:
”Our second quarter 2015 gross bookings exceeded the high end of our guidance range and for the third consecutive quarter, Candy Crush Saga, Candy Crush Soda Saga and Farm Heroes Saga ranked within the top 10 grossing games in the Apple App Store and Google Play Store in the U.S. These results reflect our execution on delivering new content and features in our franchise games and demonstrate the continued benefits from operating global mobile game franchises and the strength of their brands. We are also pleased to have recently launched Paradise Bay, our first resource management game, and Scrubby Dubby Saga, our first game with a slider mechanic, and look forward to introducing these fresh games to our massive player base and to players around the globe.”
Please see the accompanying chart showing the daily price action from April 2015 to the present. Please note the two elliptical circles shaded in yellow which show abnormal price action during those two days leading up to the earnings report.
About King Digital Entertainment Plc.
King Digital Entertainment plc, an interactive entertainment company, produces and distributes digital games on multiple platforms in the United States, the United Kingdom, Germany, and internationally. The company primarily provides Candy Crush Saga, Candy Crush Soda Saga, Farm Heroes Saga, Pet Rescue Saga, and Bubble Witch 2 Saga games. It also offers king.com and royalgames.com Websites; facebook; and mobile platforms, such as iOS and Android. King Digital Entertainment plc is based in Dublin, Ireland.