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August 12, 2014
17:41 EDTKINGKing Digital plummets to fresh lows after cutting FY14 growth outlook
Shares of interactive entertainment company King Digital (KING) are plunging in after-hours trading after the company cut its outlook for fiscal 2014 growth rates. WHAT'S NEW: After the bell, King Digital reported Q2 adjusted earnings per share of 59c and revenue of $593.5M, compared to consensus estimates of 59c and $605.67M, respectively. It reported Q2 gross bookings of $611M, up 27% compared to Q2 of 2013 and down 5% from Q1. Daily Active Users were 138M, up 82% from last year and down 3% from Q1. Monthly Active Users were 485M up 83% from last year and up 1% from Q1. The company also announced a $150M special dividend and acquired 100% of the equity of Nonstop Games, a games developer based in Singapore. WHAT'S NOTABLE: King Digital lowered its outlook for FY14 growth rates. Based on recent results and insights into the second half of the year, the company expects gross bookings to decline sequentially in Q3, followed by sequential gross bookings growth in Q4. For full year 2014, the company expects growth in gross bookings as compared to full year 2013. It sees Q3 gross bookings of $500M-$525M and FY14 gross bookings of $2.25B-$2.35B. King CEO Riccardo Zacconi 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 $154M to boost cash and cash equivalents to more than $800M." PRICE ACTION: In after-hours trading, King Digital fell $4.05, or about 22.3%, to $14.19 on heavy trading volume. This represents a fresh low for the stock, eclipsing the previous low of $15.26 made in May. King Digital debuted in late March at around $20 a share, and thus has fallen approximately 30% since its IPO.
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