King Digital Entertainment (KING) : Earnings Whisper

King Digital Entertainment plc (KING) is scheduled to report earnings results for the second quarter of fiscal 2015 today after the close. The Street has consensus estimates of $0.42 in earnings per share and $485.81 million in revenue. In the 2nd quarter of the previous year, the Dublin, Ireland-based producer and distributor of digital games posted $0.52 in EPS and $593.6 million in revenue. Meanwhile, reports a whisper number of $0.54 per share.

As a quick reminder, King Digital Entertainment reported 1Q/15 EPS of $0.61, $0.08 better than the Street’s consensus estimate of $0.53. Revs declined 6.13% yoy to $569.5 million versus the $565.2 million consensus.

On valuation measures, King Digital Entertainment plc shares are priced at 8.28x this year’s forecasted earnings, compared to the industry’s 13.12x earnings multiple. The company’s current year and next year EPS growth estimates stand at (16.1%) and (6.2%) compared to the industry growth rates of 35.60% and 55.20%, respectively. KING has a t-12 price-to-sales ratio of 2.24. EPS for the same period registers at $1.89.

KING shares have advanced 8.86% in the last 4 weeks and 4.68% in the past three months. Over the past 5 trading sessions the stock has gained 2.42%.

King Digital Entertainment is currently valued at $4.86 billion. The name has a median Street price target of $19 with a high target of $27. The ticker is down 2.40% year-over-year, compared with a 7.06% gain in the S&P 500.

In anticipation of King Digital Entertainment’s Q2 earnings today, we would like to share a few data points and highlights, courtesy of Verto Analytics:

  • Top #1 game (for a long time) in the US has been Candy Crush Saga – last month (July 2015) Candy Crush Saga had 19.1M unique users putting it ahead of Words with Friends (17.4M), Candy Crush Soda Saga (14.9M), Trivia Crack (10.6M) and Clash of Clans (8.1M).
  • Additional King games that exceed 2M monthly users in July 2015 are: Farm Heroes Saga (5.9M), Pet Rescue Saga (4.1M), Bubble Witch 2 Saga (3.2M), AlphaBetty Saga (3.1M) and Diamond Digger Saga (2.0M).
  • In the U.S., King is the largest game publisher (46.8M unique users), Zynga (ZNGA) is the second largest game publisher (32.4M), and EA the third (28.2M).

These numbers include both visitors to web sites and users for apps/games.

  • Out of 46.8M monthly King gaming users, 30.5M use King properties/games weekly, and 19.9M use daily.
  • King has 7 games in the top 50 games list in the U.S., vs. Zynga at 4 games, and Supercell and EA at 3 games each.
  • The average time spent within King games is fairly high, 9.0 minutes per session, compared to Zynga at 4.5 minutes per session and Supercell at 4.0 minutes.
  • 48% of gaming users who download King games still have the game installed after 7 days, and 34% after one month. These are lower than Supercell’s (68% and 49%, respectively), but on the same level as Zynga (48% and 36%).

“As the total monthly user base for mobile games is now at 120M in the US and still growing, King has been able to stay ahead of the competition in both the number of hit games in the top list, and the total user base. Also, the fact that they have three separate games with more than 5M unique monthly users, tells that they challenge many other digital publishers with their reach – not to mention monetization which seems to be going well for them!”, stated Dr. Hannu Verkasalo, CEO of Verto Analytics Inc.

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