King results ‘below expectations’ as Nonstop Games is acquired

Interactive entertainment company King Digital Entertainment has confirmed the acquisition of games developer Nonstop Games, but has scaled back its financial expectations for the full year after reporting lower-than-expected results for the three months through to June 30.

King reported revenue of $594 million (€444.9 million) in the second quarter of 2014, which was up 20% on the same period last year, but down 2% on the first quarter of this year.

King will be hoping the acquisition of Singapore-based Nonstop Games will boost revenues from 2015.

The transaction consists of a $6 million up-front cash payment and up to $84 million of contingent consideration based on criteria linked to revenues from the games developed.

King’s gross bookings during the most recent period totalled $611 million, which was down 5% in comparison with the first quarter of 2015 but up 27% compared to the corresponding period last year.

King put the quarter-on-quarter fall in revenue and gross bookings down to lower gross bookings from its Candy Crush Saga title, which were only partially offset by increased bookings and revenue from its Farm Heroes Saga and Bubble Witch 2 Saga games.

Despite the quarter-on-quarter fall, King’s profit for the second quarter amounted to $165 million, a 31% increase on the same period last year.

The latest results have also enabled King to announce a special dividend of $150 million.

Riccardo Zacconi, chief executive officer of King, said: “While our second quarter gross bookings came in below our expectations leading us to reduce our outlook for full-year 2014 growth rates, from a profitability perspective, the business continued to perform well, delivering adjusted EBITDA margins of 42% and generating healthy cash flows of $154 million to boost cash and cash equivalents to more than $800 million.”

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