King, the Dublin based app developer known for hit games like Candy Crush Saga and Pet Rescue Saga has announced an IPO. The developer is all set to become a public company, and plans to raise around the $500 million in NYSE in the coming months.
According to sources, King was in talks for an IPO since last November itself, but the company faced some hurdles in the filing. However, the company finally issued a prospectus to potential investors yesterday, which details the past growth of the company along with future possibilities.
According to the prospectus, 78 % of the revenue generated last year was from its best-selling game, Candy Crush Saga. The game saw around 500 million downloads last year with over 124 million of those users playing the game every day. This clearly shows the popularity of the game across all the app stores.
While the game is free to play, users can make cheap in app purchases for lives and game content which generates revenue for the company. According to the prospectus, King Digital earned over $1.48 in terms of revenue and around ¢39 cents in terms of profit per monthly user in the last quarter which shows that the game is generating huge amounts of money for the company.
However, many experts and analysts are worried that the popularity and the revenue growth of King might just be short lived. There have been many companies in the past who have prospered with a hit game, but after that the company just struggles to remain as profitable as before. For example, Zynga, the company behind the hit Facebook game, Farmville filed for an IPO back in 2011 and since then, its share price has fallen down to about half its initial value. Same goes for many other companies in this sector, which means this can be a problem for King too.
However, King believes it’s quite different from the other players in the industry. In the recent SEC filing, the company described itself as “We believe we have a repeatable and scalable game development process that is unparalleled in our industry.” And while many argue that King’s growth is driven by its single most hit game, Candy Crush Saga, the company has managed to produce similar hit games, though they are not as popular as the former. For example, its second hit game, Pet Rescue Sage boasts of around 15M active daily users, which is actually quite an achievement for a game but still way behind the 93M daily active users of Candy Crush.
Reportedly, its current investors, Riccardo Zacconi and Apax Partners could get over $500m and $2bn respectively from their shareholding in the company after the listing. The company is expected to be valued around $5.5bn on the New York Stock Exchange.
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