King Reports First Quarter 2014 Results

                   King Reports First Quarter 2014 Results  Generates record quarterly mobile gross bookings of $480 million in Q1-14  Adjusted EBITDA more than triples year over year to $249 million in Q1-14  Extends reach and size of player network - monthly unique users increases to 352 million in Q1-14  Three King games were top 10 grossing games on all major platforms - Apple App Store and Google Play Store (US) and Facebook (worldwide) for Q1-14  Led by the growth of Farm Heroes Saga, games other than Candy Crush Saga increased to 33% of Q1-14 gross bookings, up from 22% of gross bookings in Q4-13  PR Newswire  LONDON, May 7, 2014  LONDON, May 7,2014 /PRNewswire/ --King Digital Entertainment plc ("King" or the "Company") (NYSE: KING), a leading interactive entertainment company for the mobile world, today reported financial results for first quarter 2014.  "We are pleased with our first quarter 2014 results and are executing on our plan to build a strong portfolio of games," said Riccardo Zacconi, CEO of King. "Our existing titles are performing well, and with the strong performance of Farm Heroes Saga following its January mobile launch, we had three games in the top 10 grossing games list on all major platforms for the first quarter. With the massive reach of our player network, our existing portfolio of highly engaging games, and our development plan for additional games well underway, we are well-positioned for gross bookings growth and diversification in 2014."  Financial Summary and Key Performance Metrics (in millions, except per share and per user data)                                                Three months ended                                             March 31,         March 31,                                             2014              2013 Non-GAAP Results  Gross bookings                             $    641.1    $    218.6  Adjusted revenue                           $    607.6    $    206.0  Adjusted EBITDA                            $    248.6    $     81.4   Adjusted EBITDA margin                  41%               40%  Capital expenditures                       $      8.4  $      3.5  Adjusted profit                            $    187.9    $     65.1  Adjusted EPS                               $     0.61   $     0.20 GAAP Results  Revenue                                    $    606.7    $    205.9  Profit                                     $    127.2    $     52.7  Diluted EPS                                $     0.41   $     0.16  Net cash generated from operating          $    164.2    $     27.9  activities  Cash and cash equivalents at end of period $    678.2    $     51.2 Key Performance Metrics  Daily active users (DAUs)                  143               36  Monthly active users (MAUs)                481               138  Monthly unique users (MUUs)                352               101  Monthly unique payers (MUPs)               11.859            4.095  Monthly gross average bookings per         $    18.02    $    15.92   paying user (MGABPPU)    Recent Business Highlights    oGenerated record quarterly mobile gross bookings of $480 million in the     first quarter of 2014   oReports third consecutive quarter with over $600 million of gross bookings     and adjusted EBITDA margin of more than 40%   oThree King games were top 10 grossing games on the Apple App Store and     Google Play Store in the United States, our largest market, and worldwide     on Facebook for the first quarter of 2014   oIn January 2014 launched Farm Heroes Saga, King's fifth mobile game within     18 months, which reached the top 10 grossing games charts on the Apple App     Store and Google Play Store in the United States in less than two weeks   oFurther diversified gross bookings with Candy Crush Saga accounting for     67% of total first quarter 2014 gross bookings, down from 78% in the     fourth quarter of 2013, while total gross bookings increased 1% over the     same period   oLaunched Diamond Digger Saga on Facebook in April 2014, marking King's     eighth live game on Facebook   oIntroducedfour new games on royalgames.com year to date   oAnnounced an agreement with Tencent Holdings Limited to launch a localized     version of Candy Crush Saga for the Chinese market this summer by     integrating the game within Tencent's mobile communications and social     network platforms in Mobile QQ and Weixin Game Centers   oBroadened TV advertising efforts to air campaigns in a total of 24     countries during the first quarter of 2014 including all major markets     such as the United States, United Kingdom, France, Germany, and Australia   oOpened our seventh studio in Berlin, Germany  First Quarter 2014 Results Summary  Gross Bookings and Revenue    oGross bookings was $641 million for the first quarter of 2014, an increase     of $422 million or 193% compared to the first quarter of 2013, and an     increase of $9 million or 1% compared to the fourth quarter of 2013. In     the first quarter of 2014, 75% of gross bookings were derived from our     mobile audience.   oRevenue was $607 million for the first quarter of 2014, an increase of     $401 million or 195% compared to the first quarter of 2013, and an     increase of $5 million or 1% compared to the fourth quarter of 2013.   oThe increases in both gross bookings and revenue from fourth quarter 2013     to first quarter 2014 were primarily due to higher gross bookings from     Farm Heroes Saga following its mobile launch in January 2014. This     increase was partially offset by a decrease in gross bookings from Candy     Crush Saga, which accounted for 67% of first quarter 2014 gross bookings,     down from 78% in the fourth quarter of 2013.  Adjusted EBITDA    oAdjusted EBITDA was $249 million for the first quarter of 2014, an     increase of $167 million or 205% compared to the first quarter of 2013   oFirst quarter 2014 adjusted EBITDA decreased $20 million or 8% compared to     the fourth quarter of 2013 primarily due to planned increases in marketing     spend in conjunction with the launch of Farm Heroes Saga on mobile during     the period, as well as increased investments in headcount.  Profit    oProfit was $127 million for the first quarter of 2014, an increase of $75     million or 142% compared to the first quarter of 2013   oFirst quarter 2014 profit decreased $32 million or 20% compared to the     fourth quarter of 2013 primarily due to increases in marketing spend     related to the launch of Farm Heroes Saga, share-based and other     equity-related compensation expense of $78 million in the first quarter of     2014 as compared to $60 million in the fourth quarter of 2013, headcount     additions, and unrealized foreign exchange losses, which were partially     offset by lower tax expense.  Network Reach    oDaily Active Users  (DAUs) increased to 143 million in the first quarter     of 2014, up 107 million or 297% from first quarter 2013, and up 19 million     or 15% from fourth quarter 2013.   oMonthly Active Users (MAUs) increased to 481 million in the first quarter     of 2014, up 343 million or 249% from first quarter 2013, and up 73 million     or 18% from fourth quarter 2013.   oWe believe the increases in DAUs and MAUs reflect the continued growth of     our player network coupled with a greater number of games being installed     and played by our existing player base. We believe this increased activity     is due to our introduction of additional games and our releases of new     content on existing games, as well as our geographic expansion and the     overall growth in consumer usage of mobile devices.   oMonthly Unique Users (MUUs) increased to 352 million in the first quarter     of 2014, up 251 million or 249% from first quarter 2013, and up 48 million     or 16% from fourth quarter 2013. We believe the increase in MUUs is driven     by organic growth plus targeted acquisition efforts outside our     traditional markets in North America and Western Europe.  Monetization    oMonthly Gross Average Bookings per Paying User (MGABPPU) increased to     $18.02 in the first quarter of 2014, up $2.10 or 13% from first quarter     2013, and up $0.70 or 4% from fourth quarter 2013. We believe the increase     in MGABPPU reflects our ability to retain our more engaged customers     within our network through the consistent release of new content in     existing games. Additionally, we believe that an increase in our payers     who play in more than one game as well as the introduction of virtual     currency in some of our games, which creates the opportunity to transact     at higher amounts, had a positive impact on our MGABPPU during the period.   oMonthly Unique Payers (MUPs) in the first quarter of 2014 were 11.9     million, up 190% compared to 4.1 million in the first quarter of 2013. We     believe this increase was driven by the growth in our MAUs and our MUUs as     well as improved in-game monetization. First quarter 2014 MUPs declined     compared to 12.2 million in the fourth quarter of 2013. We believe this     decrease is primarily a result of reduced payment activity among the     occasional payers on the network, in addition to the introduction of     virtual currency in some of our games.  Conference Call Information  King will host a conference call today, May 7, 2014, at 8:00 a.m. Eastern Time to discuss King's results as well as other forward-looking information about King's business. Listeners may access the live conference call via a dial-in number or audio webcast.  Conference call details are: US callers: +1 877-201-0168, Conference ID: 25494037 International callers: +1 647-788-4901, Conference ID: 25494037  The conference call will be simultaneously webcast at http://investor.king.com, where listeners can also access King's earnings press release and slide presentation.  Following the call, a replay of the webcast will be available at the same website. A telephonic replay will also be available for one week following the conference call at +1 855-859-2056 (US callers), or +1 404-537-3406 (International callers), conference ID: 25494037.  About King  King Digital Entertainment plc (NYSE: KING) is a leading interactive entertainment company for the mobile world. It has a network of 352 million monthly unique users as of first quarter 2014, and offers more than 180 exclusive games in over 200 countries through its king.com and royalgames.com websites, Facebook, and mobile distribution platforms such as the Apple App Store, the Google Play Store and the Amazon Appstore. King has game studios in Stockholm, Bucharest, Malmo, London, Barcelona and Berlin along with offices in San Francisco and Malta.  Forward Looking Statements  All statements other than statements of historical fact contained in this release, including statements regarding future growth and success of games and results of the operations of King Digital Entertainment plc are forward-looking statements. King has based these forward-looking statements on its estimates and assumptions as of the date of this release. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: the fact that a relatively small number of games continue to account for a substantial majority of our revenue and gross bookings, and declines in popularity of these games could harm our financial results; our ability to develop new games and enhance existing games in a timely manner; market acceptance of new games and enhancements to existing games; intense competition in our industry; our reliance on the casual game format; our relatively short operating history in the mobile market; our dependence on the continued popularity of mobile games and devices; revenues and gross bookings from new games may not be sufficient to offset declines in revenues and gross bookings in more mature games; we may experience fluctuations in our quarterly operating results and other key metrics; we rely on various third-party platforms which may not retain their popularity; the need to attract and retain additional personnel; general economic conditions and their impact on consumer spending; the continued effectiveness of our marketing programs; as well as those risks detailed from time to time under the caption "Risk Factors" and elsewhere in King's Securities and Exchange Commission filings and reports, including in the final prospectus filed pursuant to Rule 424(b) by the Company on March 27, 2014 and future filings and reports by the Company. In addition, King operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for King management to predict all risks, nor can King assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that King may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. King does not undertake any obligation to update publicly or revise any forward-looking statements for any reason after the date of this release, to conform these statements to actual results, future events, or to changes in King's expectations.  Non-GAAP Financial Measures  King uses International Financial Reporting Standards ("IFRS"). In addition to IFRS financials, this release includes certain financial measures not based on IFRS, including gross bookings, adjusted revenue, adjusted EBITDA, adjusted EBITDA margin, capital expenditures, adjusted profit and adjusted EPS. These non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The non-GAAP financial measures used by King may differ from the non-GAAP financial measures used by other companies, and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. Some limitations of the non-GAAP financial measures we use are listed below:  Gross Bookings: Gross bookings is a non-GAAP financial measure that is not calculated in accordance with IFRS. Gross bookings is equal to the total amount paid by our users for virtual items and for access to skill tournaments.  The Company uses gross bookings to evaluate the results of our operations, generate future operating plans and assess our performance. While King believes that this non-GAAP financial measure provides a meaningful measurement of our business performance during a particular period because it measures the total cash spend by our players in the period, this information should be considered as supplemental in nature and is not meant as a substitute for revenue recognized in accordance with IFRS. In addition, other companies, including companies within our industry, may calculate gross bookings differently or not at all, which reduces its usefulness as a comparative measure.  Adjusted Revenue: Adjusted revenue is a non-GAAP financial measure that is not calculated in accordance with IFRS. King defines adjusted revenue as revenue adjusted for changes in deferred revenue. King believes that adjusted revenue is a useful metric for calculating adjusted EBITDA margin and understanding our operating results and ongoing profitability.  Adjusted EBITDA and Adjusted EBITDA Margin: Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that are not calculated in accordance with IFRS. King defines adjusted EBITDA as profit (loss), adjusted for income tax expense, other (income) expense, net finance (income) costs, depreciation, amortization, share-based and other equity-related compensation (including social security tax charges associated therewith) and changes in deferred revenue. King defines adjusted EBITDA margin as adjusted EBITDA as a percentage of adjusted revenue. King believes that adjusted EBITDA and adjusted EBITDA margin are useful metrics for investors to understand and evaluate our operating results and ongoing profitability because it permits investors to evaluate our recurring profitability from our ongoing operating activities. King also uses these measures internally to establish forecasts, budgets and operational goals and to manage and monitor our business, as well as evaluating our ongoing and historical performance. Adjusted EBITDA and adjusted EBITDA margin have certain limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under IFRS. Other companies, including companies in our industry, may calculate adjusted EBITDA differently or not at all, limiting its usefulness as a direct comparative measure.  Capital Expenditures: Capital expenditures is a non-GAAP financial measure that is not calculated in accordance with IFRS. King defines capital expenditures as the amount paid in the period for the purchase of property, plant and equipment, and intangible assets. King monitors capital expenditures as a measure of the amount we have invested in maintaining or growing the scope our business. Other companies, including companies in our industry, may calculate capital expenditures differently or not at all, limiting its usefulness as a direct comparative measure.  Adjusted Profit: Adjusted profit is a non-GAAP financial measure that is not calculated in accordance with IFRS. King defines adjusted profit as profit (loss), adjusted for share-based and other equity-related compensation (including social security tax charges associated therewith), changes in deferred revenue and amortization of acquired intangible assets. Other companies, including companies in our industry, may calculate adjusted profit differently or not at all, limiting its usefulness as a direct comparative measure.  Adjusted EPS: Adjusted EPS is a non-GAAP financial measure that is not calculated in accordance with IFRS. King defines adjusted EPS as adjusted profit divided by the diluted weighted average number of ordinary shares in issue during the period.  Reconciliations of these non-GAAP measures to the most directly comparable IFRS measure are included in the accompanying tables.  Contacts  Investors:  Alice Ryder, VP of Investor Relations ir@king.com  Media:  Susannah Clark, Senior Director of Communications media@king.com  Brunswick Group kingteam@brunswickgroup.com      KING DIGITAL ENTERTAINMENT PLC CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) (unaudited)                                              Three Months Ended March 31,                                              2014              2013 Revenue                                      $    606,709   $                                                                     205,918 Costs and expenses* Cost of revenue                              195,996           64,014 Research and development                     46,757            22,183 Sales and marketing                          129,099           47,629 General and administrative                   73,378            6,514 Total costs and expenses                     445,230           140,340 Net finance income (costs)                   (268)             3 Profit before tax                            161,211           65,581 Tax expense                                  34,012            12,930 Profit                                      $    127,199   $                                                                      52,651 Earnings per share attributable to the equity holders of the Company during the period  Basic earnings per share                $           $                                                     0.43              0.17  Diluted earnings per share              $           $                                                     0.41              0.16 Weighted average number of shares used in computing earnings per share:  Basic                                    298,674           303,613  Diluted                                  309,842           325,169 _______________ * Includes share-based and other equity-related compensation expense as follows: Cost of revenue                              $            $                                                    4,066             1,123 Research and development                    25,752            13,271 Sales and marketing                         5,585             453 General and administrative                  42,613            451  Total share-based and other        $     78,016  $       equity-related compensation expense                           15,298      KING DIGITAL ENTERTAINMENT PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands)                                              March 31,        December 31,                                              2014             2013                                              (unaudited)      (audited) Assets Current assets Cash and cash equivalents                  $    678,170  $    408,695 Trade and other receivables                226,324          216,881 Income tax receivable                      1,379            1,379 Total current assets                       905,873          626,955 Non current assets Intangible assets, net                     11,614           9,239 Property, plant and equipment, net         18,661           14,258 Deferred tax assets                        27,420           47,440 Income tax receivable                      122,356          103,534 Other deposits                             5,602            5,437 Total non current assets                   185,653          179,908 Total assets                               $  1,091,526   $    806,863 Liabilities and shareholders' equity Current liabilities Trade and other payables                   199,473          172,107 Deferred revenue                           11,799           10,942 Income tax liabilities                     76,997           118,728 Provision for other liabilities            18,929           15,513 Total current liabilities                  307,198          317,290 Non current liabilities Deferred tax liabilities                   19               17 Income tax liabilities                     142,861          120,903 Provision for other liabilities            1,273            1,266 Total non current liabilities              144,153          122,186 Total liabilities                          $    451,351  $    439,476 Shareholders' equity Share capital                              77               65 Other reserves                             428,688          65,995 Retained earnings                          211,410          301,327 Total shareholders' equity                 640,175          367,387 Total liabilities and shareholders' equity $  1,091,526   $    806,863      KING DIGITAL ENTERTAINMENT PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)                                                 Three months ended March 31                                                 2014             2013 Cash flows from operating activities Profit before tax                             $    161,211  $   65,581 Adjustments to reconcile profit before tax to cash flows from operating activities: Amortization                                 847              447 Depreciation                                 1,918            587 Equity settled share-based payments           42,747           12,067 Loss on disposal of property, plant and        62               - equipment & intangible assets Net finance costs (income)                    268              (3) Increase in deferred revenue                  857              98 Increase in trade and other receivables       (9,757)          (69,949) Increase in trade and other payables         30,394           19,158 Cash flows from operating activities          228,547          27,986 Interest received                             56               3 Interest paid                                 (378)            - Tax paid                                      (64,049)         (57) Net cash generated from operating activities  164,176          27,932 Cash flows from investing activities Purchases of intangible assets                (2,102)          (1,788) Purchase of property, plant and equipment     (6,301)          (1,698) Purchase of a business, net of cash acquired  (1,150)          - Net cash used in investing activities         (9,553)          (3,486) Cash flows from financing activities Payment of dividends                          (217,116)        - Proceeds from sale of share capital on IPO    329,404          - Proceeds from sale of share capital           3,034            - Repurchase of shares                          (1,240)          - Net cash from financing activities            114,082          - Net increase in cash and cash equivalents     268,705          24,446 Cash and cash equivalents at the beginning of  408,695          27,912 the period Exchange gains (losses) on cash and cash       770              (1,153) equivalents Cash and cash equivalents at the end of the    $    678,170  $   51,205 period      Reconciliation of Non-GAAP Results to Nearest GAAP Measures (in thousands, except percentages and per share amounts) (unaudited)                                                   Quarter Ended                                                   Mar. 31, 2014  Mar. 31, 2013 Reconciliation of Revenue toGross Bookings: Revenue                                           $ 606,709     $ 205,918 Sales tax                                        34,714         14,735 Other revenue                                     (2,499)        (3,497) Movement in player wallet andother adjustments   1,300          1,339 Change in deferred revenue                        865            101 Gross bookings                                   $ 641,089     $ 218,596 Reconciliation of Revenue toAdjusted Revenue: Revenue                                          $ 606,709     $ 205,918 Change in deferred revenue                       865            101 Adjusted revenue                                 $ 607,574     $ 206,019 Reconciliation of Profit to Adjusted EBITDA: Profit                                           $ 127,199     $  52,651 Add: Income tax expense                               34,012         12,930 Other (income) expense , net                     5,466          (589) Net finance (income) costs                       268            (3) Share-based and other equity-related compensation 78,016         15,298 Change in deferred revenue                       865            101 Depreciation and amortization                    2,765          1,034 Adjusted EBITDA                                  $ 248,591     $  81,422 Adjusted EBITDA margin                           41%            40% Reconciliation of Profit to Adjusted Profit: Profit                                           $ 127,199     $  52,651 Add: Share-based and other equity-related compensation 78,016         15,298 Change in deferred revenue                       865            101 Amortization on intangible assets acquired        30             30 Tax effect of adjustments                         (18,230)       (2,959) Adjusted Profit                                   $ 187,880     $  65,121 Reconciliation of Adjusted EPS: Adjusted Profit                                   $ 187,880     $  65,121 Diluted weighted average number of ordinary       309,842        325,169 shares Adjusted EPS                                      0.61           0.20      Reconciliation of Non-GAAP Results to Nearest GAAP Measures (in thousands) (unaudited)                                                   Quarter                                                   Ended                                                   Dec. 31,                                                   2013 Reconciliation of Revenue toGross Bookings: Revenue                                           $ 601,715 Sales tax                                        31,530 Other revenue                                     (2,442) Movement in player wallet andother adjustments   1,599 Change in deferred revenue                        (276) Gross bookings                                   $ 632,126 Reconciliation of Profit to Adjusted EBITDA: Profit                                           $ 159,246 Add: Income tax expense                               47,583 Other (income) expense , net                     688 Net finance (income) costs                       (54) Share-based and other equity-related compensation 59,599 Change in deferred revenue                       (276) Depreciation and amortization                    2,186 Adjusted EBITDA                                  $ 268,972    SOURCE King Digital Entertainment plc  Website: http:/www.king.com  
Press spacebar to pause and continue. Press esc to stop.