Candy Crush Maker Files for IPO; To Raise $533 Million

Candy Crush Maker Files for IPO; To Raise $533 Million

imgresKing, the European makers of the unbelievably popular game Candy Crush Saga, have moved a step closer towards an IPO filing in the U.S. The updated F-1 filed with the SEC this morning prices 22.2 million shares between $21 and $24 per share, which will raise up to $533 million and value the company in at up to $7.6 billion. This is an increase from their prior initial F-1 with a maximum aggregated  offering of $500 million.

The filing continues the trend of tech companies taking advantage of generous public markets that have been largely rewarding tech companies. However, free-to-play gaming companies like Zynga have been incredibly volatile in their stock price, since many have revenues dependent on the hit of a single game. Some analysts argue that companies like these are better of staying private due to the speculative and volatile nature of their earnings.

Even if Candy Crush Saga, or any of King’s other free-to-play games, sees a decline in popularity and usage, that isn’t the case now. And obviously King is trying to make hay while the sun shines. But it’s fairly certain that, as with other gaming companies, King will experience a decline at some point.

As of December 2013, King claimed 128 million daily active users playing its games more than 1.2 billion times per day. In today’s filing, King notes that as of February 2014, an average of 144 million daily active users played their games more than 1.4 billion times per day. “We believe Candy Crush Saga, our top title to date, is one of the largest interactive entertainment franchises of all time,” the company wrote in the filing. That game alone brings in some 97 million daily active users and over 1 billion daily game plays. (I’ve contributed to this myself on occasion, such as long flights without wifi.)

King’s revenues are mainly derived by in-game purchases. When you run out of allotted lives in Candy Crush Saga, you can opt to purchase an additional set of lives, or wait a specified amount of time for your lives to recharge (protip: or move your system clock forward). Interestingly, because of the size of in-game purchases, King was able to reduce advertising on its platform considerably. That has led to a massive boom in sales, in which King raked in $1.88 billion in revenues in 2013, up from a paltry $164 million in 2012. This is mostly tied to mobile, with 73% of revenue from mobile in Q4 2013.