King Files with the SEC, prepares to IPO

    Big IPO news for the region. Despite press rumors saying they would hold off from their IPO for the time being, Stockholm-founded King has officially filed with the Securities Exchange Commission, meaning their IPO will move forward. They plan to raise up to $500 million through the IPO. JP Morgan, Credit Suisse and BofA Merrill Lynch are the lead underwriters. The company plans to list on the New York Stock Exchange under the ticker KING.

    The company saw more than a tenfold revenue increase in 2013, leading up to $1.88 billion from $1.64 million. Of that, their profit was $568 million, up from $7.8 million in 2012.

    With these profits, King says that 4% of their monthly uniques, or about 12 million players, purchased in-app purchases in the last quarter of 2013. As hinted at in our IPO rumors article earlier today, a small number of King’s 180 titles accounted for these revenues. In the 4th quarter of 2013, Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga accounted for 95% of this churn, with Candy Crush Saga alone accounting for 78%.

    King has seen a large jump in active users, as shown by the chart below, and in the “what’s next for King” section, they plan to hunker down into mobile and bring in more titles in addition to their five current mobile titles.

    As for why they’re going public, the prospectus states:

    As you’ll see in the financial results section of this document, 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.
    We believe King has been built for the long haul and we look forward to working hard and having fun along the way as we head into this next stage of our company.
    Thank you for taking the time to read this letter, and for your interest in King.

    King has gotten a bad rep in the gaming community due to the fact that King has been protecting its IP by going after other gaming developers with the name “Candy” in the title. Additionally many in the tech community seem skeptical that the company can produce further hits, leading to another “Zynga” situation where investors will be scared off from any further IPOs. Will King be able to make repeat successes? Time will tell. At the very least, this cash flowing into Swedish shareholders’ profits should be a good thing for the Nordic gaming and startup scene.

    I recommend anyone to read the King prospectus filing – they’re long but interesting documents about how the company is run.