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Candy Crush maker King's revenue up in 2018 to $2bn, touts $100m ads business

"The next phase about where the ad business heading is about continued scaling"
Candy Crush maker King's revenue up in 2018 to $2bn, touts $100m ads business

King revenue hit $2 billion for 2018 as it beat the previous year’s total sales by $88 million.

Operating income for the year hit $750m, up from $700m in 2017, also representing a 36 per cent operating margin.

For the three months ending December 31st alone, revenue grew five per cent year-on-year to $543m, while operating income increased 28% to $207m with a 38 per cent operating margin.

It was noted that King has had two of the top 10 highest grossing mobile games in the US for 21 consecutive quarters.

Monthly active users for the mobile company’s portfolio fell from 290m in 2017 to 268m, though MAUs and net bookings for the Candy Crush franchise grew year-on-year and quarter-on-quarter.

This is likely down to the launch of Candy Crush Friends Saga, which the publisher said saw “strong monetisation and retention trends”, though didn’t elaborate further.

Growing ads business

A particular boon for King was that net bookings from advertising had grown 50 per cent sequentially.

In an earnings call, as transcribed by Seeking Alpha, King president Humam Sakhnini said that in Q1 2018 King hit profitability for its ads business.

Now it’s hoped that advertising will start meaningfully contributing to King’s overall operations, with expectations that it’ll “cross the $100 million booking threshold this year”.

“As I look ahead, I think on the next phase about where the ad business heading is about continued scaling,” said Sakhnini.

“So we will continue to scale more and in fact the ad network at King and we have more work to do there to enable it in more of our games and we're continuing to educate our demand partners on kind of the power of our ad product and there's really good momentum there.

“And I think kind of after that, we will think about even more ways to deploy the ad product. It could be in new mobile experiences or esports. I think the team has a ton of learnings and potential that's could be applied in there.”

Overall sales

Overall, Activision Blizzard reported a record Q4 and a record year for 2018.

Net revenue hit $7.5 billion across its businesses, compared to $7.02bn in 2017. Operating income meanwhile grew significantly to nearly $2 billion, up from $1.3 billion in 2017.

Net bookings meanwhile reached a record $7.26bn, compared to $7.16bn the year prior.

Overall net revenue for the year for mobile and ancillary sales hit $2.17 billion, making up 29 per cent of the company’s overall business.  Interestingly, that was down from 30 per cent the year prior despite growth.

Despite the strong financials, Activision is restructuring its operations, resulting in redundancies for eight per cent of its workforce.

It's reportedly set to close King's Seattle studio as part of the sweeping cuts, resulting in 78 job losses.

In its earnings presentation, Activision said it plans to invest more in its biggest, internally-owned franchises and cut teams in "certain non-development and administrative-related costs across our business.

It also pledged to begin "de-prioritising games and initiatives that are not meeting our expectations".

Catch up with more mobile games industry financials on our calendar here.