King Reports First Quarter 2014 Results

                   King Reports First Quarter 2014 Results

  PR Newswire

  LONDON, May 7, 2014

- 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

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 activities          $  164.2  $   27.9
 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 paying user
 (MGABPPU)                                             $  18.02  $  15.92

Recent Business Highlights

  *Generated record quarterly mobile gross bookings of $480 million in the
    first quarter of 2014
  *Reports third consecutive quarter with over $600 million of gross bookings
    and adjusted EBITDA margin of more than 40%
  *Three 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
  *In 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
  *Further 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
  *Launched Diamond Digger Saga on Facebook in April 2014, marking King's
    eighth live game on Facebook
  *Introducedfour new games on royalgames.com year to date
  *Announced 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
  *Broadened 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
  *Opened our seventh studio in Berlin, Germany

First Quarter 2014 Results Summary

Gross Bookings and Revenue

  *Gross 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.
  *Revenue 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.
  *The 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

  *Adjusted EBITDA was $249 million for the first quarter of 2014, an
    increase of $167 million or 205% compared to the first quarter of 2013
  *First 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

  *Profit was $127 million for the first quarter of 2014, an increase of $75
    million or 142% compared to the first quarter of 2013
  *First 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

  *Daily 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.
  *Monthly 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.
  *We 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.
  *Monthly 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

  *Monthly 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.
  *Monthly 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
equity-related compensation expense             $   78,016  $    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 fromoperating activities:
Amortization                                             847           447
Depreciation                                           1,918           587
Equity settled share-based payments                    42,747        12,067
Loss on disposal of property, plant and
equipment & intangible                                     62             -
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
the period                                             408,695        27,912
Exchange gains (losses) on cash and cash
equivalents                                                770       (1,153)
Cash and cash equivalents at the end of the
period                                            $  678,170    $  51,205

         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
shares                                                 309,842        325,169
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

Website: http:/www.king.com
 
Press spacebar to pause and continue. Press esc to stop.