The prevailing skepticism about tech IPOs is that frothy valuations sans profits are contributing to a bubble. Yet King Digital Entertainment, maker of the highly addictive game Candy Crush Saga is one of the few big mobile companies posting hefty revenues and profits ahead of its own IPO.  While rival games maker Zynga is booking losses and struggling to keep its shares aloft, King.com booked $568 million in profit, on sales of $1.8 billion in 2013. Its limited stable of popular games like Candy Crush and Pet Rescue Saga are free, but players fork out to extend their game sessions, enhance skills and boost their progress, or unlock new levels.  The Dublin, Ireland based company said today that it could be valued as high as $7.6 billion at its IPO after selling 22.2 million shares at between $21 and $24 per share. It plans to list ordinary shares on the New York Stock Exchange under the ticker symbol ‘KING.’  Among is largest investors are Apax Partners, with its 48% stake, and Index Ventures, with 8.3%.  King.com’s regulatory filing also revealed that its founder Riccardo Zacconi, 46, has a 10.4% stake in the company, while his chairman Melvyn Morris, 57, is the company’s second largest stakeholder with 12.2%.  Despite hockey-stick growth since 2012, a point of concern for potential investors might be how the company’s finances have fared most recently. King saw its first fall in quarterly revenue in the last three months of 2013, when sales slipped to $632 million from $648 million in the previous quarter. Net income also slid to $269 million from $290 million.  The company said fluctuations in its quarterly results were a risk for future investors, and that this made future results difficult to predict. It warned that it also faced “significant competition” and that it relied on third-party platforms like Facebook, Apple Apple’s App Store and Google Google Play to distribute games and collect revenue.  Meanwhile its free-to-play model is “evolving” and perhaps most concerning of all: King relies heavily on having one or two blockbuster hits to keep revenues flowing. In the fourth quarter of 2013 for instance, an extraordinary 78% of its total gross bookings came from Candy Crush Saga alone.
Though it sounds like another frothy tech valuation, the Candy Crush developer booked a remarkable $1.8 billion in sales in 2013.