King Digital Entertainment KING +0.17% PLC's stock-market debut in March was among the worst in the U.S. this year, dropping 16% in its first day of trading as investors worried that the maker of the "Candy Crush Saga" mobile game was a one-hit wonder.
On Tuesday the Anglo-Swedish company gave them more to worry about.
King reported that bookings from "Candy Crush Saga" declined more than expected, prompting the company to issue a downbeat forecast for the current quarter and full year.
King's shares plunged 21% to $14.40 in after-hours trading.
Since the $500 million offering, the company has continued to be dogged by concerns about its heavy reliance on "Candy Crush," a puzzle game played through Facebook and smartphones that was released in 2012. The stock took a tumble in May, falling more than 30% below its IPO price at one point.
The stock rallied in June as analysts argued the company was succeeding in diversifying away from "Candy Crush" with other games.
King is one of the best-known advocates of the so-called free-to-play business model, offering games free and making money from users who pay for virtual goods and access to tournaments. The company stresses its bookings measurement, which represents the gross proceeds from those transactions.
But on Tuesday the company said its second-quarter bookings fell $30 million, or 5%, from the first quarter to $611 million. The decline was primarily because of "Candy Crush Saga," the company said.
King said it expects bookings for the current quarter to decrease to between $500 million and $525 million—a drop of 14% to 18% from the second quarter.
"We have seen a stronger, unexpected decline in 'Candy Crush' in the latter part of the quarter," Chief Executive Riccardo Zacconi said in an interview.
The company projected bookings of $2.25 billion to $2.35 billion for all of this year, down from a previous projection of $2.55 billion to $2.65 billion.
"Candy Crush is declining pretty rapidly, and the other games are not growing rapidly enough," said Michael Pachter, a Wedbush Securities analyst.
Finding a successful second act has been a trouble for other videogame companies, too. Zynga Inc. ZNGA +0.53% has struggled to build a big business beyond its original hit titles such as "Farmville."
King introduced several new games in the past quarter and rolled out a version of "Candy Crush Saga" for the Chinese market in partnership with Tencent Holdings Ltd. 0700.HK -1.88% In a sign that the strategy is showing some progress, bookings from games other than "Candy Crush" increased to about $250 million in the second quarter, or 41% of total revenue, up from 33% in the first quarter.
"We're in a year of transition from 'Candy Crush'…to a strategy of building a portfolio of games, and we see that the strategy is working overall," Mr. Zacconi said.
King showed progress in other results. Second-quarter profit rose 31% from a year earlier to $165.4 million, or 52 cents a share, up from $125.9 million, or 39 cents a share. Revenue rose 30% to $594 million.
Adjusted for items such as deferred revenue, King reported profit of 59 cents a share, in line with analysts' estimates.
King said it would offer a $150 million special dividend. It also announced the acquisition of the Singapore-based studio Nonstop Games, paying $16 million upfront plus $84 million in additional contingent consideration.
The company said the studio would help King to create new games outside of its traditional genres, with the first titles slated to arrive next year.
On Tuesday the Anglo-Swedish company gave them more to worry about.
King reported that bookings from "Candy Crush Saga" declined more than expected, prompting the company to issue a downbeat forecast for the current quarter and full year.
King's shares plunged 21% to $14.40 in after-hours trading.
Since the $500 million offering, the company has continued to be dogged by concerns about its heavy reliance on "Candy Crush," a puzzle game played through Facebook and smartphones that was released in 2012. The stock took a tumble in May, falling more than 30% below its IPO price at one point.
The stock rallied in June as analysts argued the company was succeeding in diversifying away from "Candy Crush" with other games.
King is one of the best-known advocates of the so-called free-to-play business model, offering games free and making money from users who pay for virtual goods and access to tournaments. The company stresses its bookings measurement, which represents the gross proceeds from those transactions.
But on Tuesday the company said its second-quarter bookings fell $30 million, or 5%, from the first quarter to $611 million. The decline was primarily because of "Candy Crush Saga," the company said.
King said it expects bookings for the current quarter to decrease to between $500 million and $525 million—a drop of 14% to 18% from the second quarter.
"We have seen a stronger, unexpected decline in 'Candy Crush' in the latter part of the quarter," Chief Executive Riccardo Zacconi said in an interview.
The company projected bookings of $2.25 billion to $2.35 billion for all of this year, down from a previous projection of $2.55 billion to $2.65 billion.
"Candy Crush is declining pretty rapidly, and the other games are not growing rapidly enough," said Michael Pachter, a Wedbush Securities analyst.
Finding a successful second act has been a trouble for other videogame companies, too. Zynga Inc. ZNGA +0.53% has struggled to build a big business beyond its original hit titles such as "Farmville."
King introduced several new games in the past quarter and rolled out a version of "Candy Crush Saga" for the Chinese market in partnership with Tencent Holdings Ltd. 0700.HK -1.88% In a sign that the strategy is showing some progress, bookings from games other than "Candy Crush" increased to about $250 million in the second quarter, or 41% of total revenue, up from 33% in the first quarter.
"We're in a year of transition from 'Candy Crush'…to a strategy of building a portfolio of games, and we see that the strategy is working overall," Mr. Zacconi said.
King showed progress in other results. Second-quarter profit rose 31% from a year earlier to $165.4 million, or 52 cents a share, up from $125.9 million, or 39 cents a share. Revenue rose 30% to $594 million.
Adjusted for items such as deferred revenue, King reported profit of 59 cents a share, in line with analysts' estimates.
King said it would offer a $150 million special dividend. It also announced the acquisition of the Singapore-based studio Nonstop Games, paying $16 million upfront plus $84 million in additional contingent consideration.
The company said the studio would help King to create new games outside of its traditional genres, with the first titles slated to arrive next year.
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