King Digital Entertainment PLC is going public.
The company did not disclose how many shares it expects to offer in the IPO, or a projected price range for the stock. In papers filed Tuesday with the Securities and Exchange Commission, the company said it hopes to raise as much as $500 million in the offering. The amount could change in the coming weeks as the company and the IPO’s underwriting banks gauge investor demand.
King has replaced Zynga Inc. as the No. 1 producer of games played on Facebook.
So is King the next Zynga?
Several analysts say any comparisons between King and Zynga are unfair — to both companies. “They have been around longer and are much larger,” said John Fitzgibbon, the founder of IPOScoop.com. “Why go public? Because they can.”
King is five years older than San Francisco’s Zynga, and, thanks largely to in-app purchases, the company generated 2013 revenue of $1.88 billion, more than 10 times its 2012 revenue of $164.4 million. Zynga’s 2013 revenue, meanwhile, was $873.3 million, down from $1.28 billion in 2012.
Another major difference: King is profitable, while Zynga is not. King had 665 employees at the end of 2013. Zynga, meanwhile, is cutting jobs but still has about 2,100 employees, down from a peak of 3,300 in 2012.
“They are two different kinds of game companies …,” said Gartner analyst Brian Blau. Zynga and King also take different approaches to game development, Blau added.
King filed its original IPO papers last summer, under a federal law passed in 2012 that allows companies with less than $1 billion in revenue in its last fiscal year to keep its IPO documents under seal until the final few weeks before a price is set on a stock offering. The legislation — known as the Jumpstart Our Business Startups, or JOBS, Act — allowed Twitter Inc. to secretly fine-tune its filing to satisfy regulators before going public in November 2013.
King will certainly face questions from investors over whether it can sustain soaring revenue growth. Already, the company saw a sequential slowdown between the third and fourth quarters of last year. Its revenue in the first three months of 2013 was $205.9 million. It more than doubled that in the second quarter, to $455.5 million. Revenue then peaked at $621.2 million in the third quarter, and declined 3 percent, to $601.7 million, in the fourth.
Meanwhile, another popular online-game company has not disclosed IPO plans, despite rumors. Founded in 2003, Espoo, Finland-based Rovio is still privately held.