If you just read the items in the release, things looked solid on the surface. The company generated $154 million in cash, $248 million of adjusted EBITDA, and claimed an EBITDA margin north of 40%. But then comes the dreaded confessional statement – reducing outlook for the full-year 2014.
This seems too soon to do, but King even announced a $150 million special dividend. Also, King’s executive officers, directors, founders and affiliated funds which represent 80% of the cumulative outstanding shares have agreed to a new lockup through the date following the announcement of fourth quarter and full year 2014 earnings.
Adjusted earnings were $0.59 per share in the second quarter, as expected. Revenue was $593.6 million. Third quarter bookings are expected to decline sequentially to a range of $500 million to $525 million, with fourth quarter bookings higher sequentially – and bookings for the year of $2.25 billion to $2.35 billion.
King Digital shares were up 3-cents at $18.20 in regular trading on Tuesday, but the stock tanked to post-IPO lows after the close. Its post-IPO range was $15.26 to $23.48, and the Tuesday evening trading had King shares down 22% at $14.04.
Investors in yet another one of the new-age gaming companies are getting to find out all over again that it isn’t always fun being an owner of a public company.
As a reminder, King Digital’s IPO price was $22.50, and its stock traded lower in its debut.
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