Candy Crush Saga, most downloaded free app on iPhones and iPads in 2013 is now hoping its popularity will result into sugar crush by going public.
King Digital Entertainment PLC, behind Candy Crush and several other big mobile games such as Bubble Witch Saga, Pet Rescue Saga and Papa Pear Saga has filed its initial IPO papers with the Securities and Exchange Commission.
An obvious implication from analysts is that it might not appeal investors even though it’s popular on a massive scale and is rapidly growing company since it’s based around a single game.
King hasn’t disclosed yet how many shares it expects to offer in the IPO or a projected price range for the stock. The company is hoping to raise as much as $500 million in the offering.
In 2012, King had generated profits of $568 million on revenue of $1.18 billion. While in 2011, the numbers were below par with a loss of $1.3 million on revenue of $64 million.
The abrupt growth arises from the launch of Candy Crush in the summer of 2012 with over 93 million people playing it every day. The game alone generates 78% of its revenue.
Despite the fact that revenues accelerated, they were disappointing with a $621 million decline in the third quarter to 4602 million in the fourth quarter. The company claimed that the turn down was influenced by a decrease in Candy Crush Saga gross bookings, even though it is making efforts to diversify others games from its portfolio.
The game is free, since King like every other big game company is giving away the product for free. But it drives majority of its money from a minority of users who buy virtual power-ups to leg up in the game. It has 4 % of its users (about 12 million people) who are regular buyers spending an average of $17.32 a month.
King is dependent on mobile users since that is where 70% of its revenue comes from. It also has a minority of big distributors such as Facebook, app stores run by Google, Apple and Amazon with almost all of its money coming from people who have installed the game.
In past few months, the company made more than $500 million in dividend payments – a $217 million payment in February 2014 alone to its board of directors, top executives and major investors. Private Equity fund Apax owns 48.2 percent of King while Index Ventures owns another 8.3 percent.