Consulting hack: Investor relations presentations

By | August 8, 2015

Candy Crush. So last night, my wife and I were playing Candy Crush on 3 different devices. Yes, it is a big part of our recreation life.  Sad and funny. So which wretched company created this time-sucking game?

King Entertainment is publicly traded under the ticker symbol of KING (nice). Looking at their investor relations presentations here, you get a good summary. As with any IR website, remember this is what they tell their bosses – Wall Street analysts.

Consultantsmind King - Logo

Monster revenues. These guys make a crazy amount of money. In Q1, $604MM with a 44% EBIDTA margin. With that run rate, they will make 2.4 billion in revenues with $1 billion in profits. What? Where does that money come from?

Consultantsmind King Entertainment

364 million monthly unique users (MUU). So that means globally, they have a population the size of the USA playing some form of game monthly. Amazing.

Where does the money come from? Clearly not all of those people pay money. The majority do not. It’s a freemium model where they give the base game out for free, and those interested can buy more cheats, hacks, and power moves. Looks like about 8.5 million people pay to play, and that amount has been increasing to where it is now. .  at $23.64 a month.  8.5 million people paying an average of $283 annually.  Yikes.

Consultantsmind King - Average monthly bookings

Yeah, but isn’t it a 1 hit wonder? If I were an investor, this would be my first question. Remember how Zynga was Farmville crazy, and then people tired of it. . . sending the stock crashing? Looks like KING is aware of that and addressing it head on.  In the most recent quarter, 62% of their revenues were not Candy Crush.

Consultantsmind King - Non Candy Crush

Paying dividends. Unlike most young, fast-growth, tech companies, KING is paying out dividends to their shareholders like a stodgy utility. I guess they see their growth somewhat limited and would rather give money back to shareholders and buy back stock. Interesting because that is some financial savvy, and self-awareness in a tech start-up that I would imagine is rare and probably wise. More cynically, it is a good way for people with shares (founders, angels, and venture capitalists) to get their money out without noticeably “selling” their own shares.

Consultantsmind King - Dividends

Stock has not been great. Looking at the stock trend it has been going side-ways or down since the beginning. Nothing inspiring for a long-term investor here. Probably better to just stick with the game. Even $23 a month for the hardcore user is cheaper than losing money in the stock. Sugar Crush.

Consultantsmind King - Stock trend

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