Dublin’s mobile game producer King Digital Entertainment Plc plans to file for a $500 million initial public offering in New York, capitalizing on a growing global appetite for mobile games, according to a fresh regulatory filing.
King Digital makes the addictive puzzle game "Candy Crush Saga." The company earned almost all of its revenue in 2013 from sales of virtual in-game items to players across its game portfolio, noted the filing.
Prices of the shares to be offered weren’t yet specified. JPMorgan & Chase Co. (NYSE:JPM), Credit Suisse Group AG (VTX:CSGN) and Bank of America Corp. (NYSE:BAC) were listed as lead underwriters.
The company has seen explosive growth since 2012. Revenue grew from $22 million in the first quarter of 2012 to $602 million by the end of 2013, with profits sliding from a $1 million loss to $159 million in profits over the same period.
King Digital estimates that its games are played more than 1.2 billion times a day, by 324 million monthly users. But only 4 percent of those users have shown themselves willing to pay for virtual items, the filing said.
The game producer will list on the New York stock exchange under the ticker “KING.” Other popular games from the company include Pet Rescue Saga and Farm Heroes Saga, part of what it calls their “proven Saga format.” The first Saga game appeared on Facebook in 2011.
“We believe Candy Crush Saga, our top title to date, is one of the largest interactive entertainment franchises of all time,” the prospectus states.
The filing also included graphics on their business alongside financial metrics, included below. The prospectus also includes dozens of pages outlining risks, where the company warns that it may not maintain past growth and relies heavily on three games for 95 percent of gross bookings. Prior to 2010 the company deployed a significantly different business model, which drew money from advertising and tournaments.
King CEO Riccardo Zacconi notes to potential shareholders who wonder why the company is going public: “We have a substantial cash position and no debt, and we have been cash flow positive since 2005. Going public creates a liquid market for our current and future employees and equity holders and will give us greater flexibility to act on strategic opportunities if they arise in the future.”
He also invites readers to download and try "Farm Heroes Saga" for the first time.
Japanese gaming companies have been especially effective in persuading users to pay for in-game perks, the Wall Street Journal reported.