OREANDA-NEWS. February 15, 2016. King Digital Entertainment plc ("King" or the "Company") (NYSE: KING), a leading interactive entertainment company for the mobile world, today reported financial results for the fourth quarter and full year ended December 31, 2015.

King CEO

Riccardo Zacconi said, "Our fourth quarter 2015 results reflect our continued execution on our franchise strategy. For the fourth consecutive quarter, both Candy Crush Saga and Candy Crush Soda Saga continued to rank within the top 5 grossing games in the Apple App Store and Google Play Store in the U.S.  We are also pleased to have launched the third installment of the Candy Crush franchise, Candy Crush Jelly Saga, which introduces new challenges and game modes, including our first 'boss mode', to offer our players another fun way to play one of the world's most popular games."

Financial Summary and Key Performance Metrics (in millions, except per share and per user data)


Three Months Ended



Years Ended



December 31,



December 31,



2015



2014



2015



2014


Non-GAAP Results
















Gross bookings

\\$

509



\\$

586



\\$

2,145



\\$

2,382


Adjusted revenue

\\$

478



\\$

559



\\$

2,021



\\$

2,284


Adjusted EBITDA

\\$

188



\\$

237



\\$

826



\\$

950


   Adjusted EBITDA margin

39%



42%



41%



42%


Capital expenditures

\\$

26



\\$

17



\\$

62



\\$

41


Adjusted profit

\\$

123



\\$

184



\\$

617



\\$

738


Adjusted EPS

\\$

0.38



\\$

0.57



\\$

1.93



\\$

2.30


















GAAP Results
















Revenue

\\$

461



\\$

546



\\$

1,999



\\$

2,260


Profit

\\$

91



\\$

141



\\$

517



\\$

575


Diluted EPS

\\$

0.28



\\$

0.44



\\$

1.62



\\$

1.79


Net cash provided by operating activities

\\$

212



\\$

155



\\$

676



\\$

661


Cash and cash equivalents at end of period

\\$

1,107



\\$

964



\\$

1,107



\\$

964


















Key Performance Metrics
















Monthly active users (MAUs)


449




533




494




499


Daily active users (DAUs)


128




149




141




142


Monthly unique users (MUUs)


318




356




338




350


Monthly unique payers (MUPs)


6.583




8.344




7.386




9.824


Monthly gross average bookings per

\\$

25.76



\\$

23.42



\\$

24.20



\\$

20.21


     paying user (MGABPPU)
















 

Full Year 2015 Highlights

  • On a worldwide basis, both Candy Crush Saga and Candy Crush Soda Saga were top 10 grossing games for full year 2015 on both the Apple App Store and Google Play Store1
  • Further diversified the game portfolio with the launch of four mobile games, each introducing a new game play to King players around the world
  • Two King games, Paradise Bay and Blossom Blast Saga, were named in Facebook's 2015 Games of the Year, and Candy Crush Soda Saga was highlighted by Google as one of the Best Games of 2015
  • Expanded distribution platforms to include Windows 10 and entered into agreement for certain King games to automatically install with Windows 10 during an initial period 
  • Grew portfolio of localized games in Asia with launches of six titles in South Korea, five titles in China, and four titles in Japan

Full Year 2015 Results Summary

Gross Bookings and Revenue

  • Gross bookings were \\$2.1 billion in 2015, representing an annual decrease of \\$238 million, or 10%.  Excluding the impact of changes in foreign exchange rates, gross bookings would have decreased by approximately 3%.
  • In 2015, 82%, or \\$1.8 billion of gross bookings were derived from our mobile audience.  This represented a 3% annual decline in mobile gross bookings.  Gross bookings from web platforms were \\$379 million, representing a 33% annual decrease.
  • Revenue was \\$2.0 billion in 2015, representing an annual decrease of \\$261 million or 12%.

Profit

  • Profit for the year was \\$517 million, representing a year over year decrease of \\$58 million, or 10%.

Adjusted EBITDA

  • Adjusted EBITDA was \\$826 million in 2015 representing a year over year decrease of \\$124 million, or 13%.  

Cash and Cash Equivalents

  • Cash and cash equivalents were \\$1.1 billion at December 31, 2015, representing a year over year increase of \\$143 million, primarily resulting from net cash provided by operating activities, partially offset by net cash used in investing and financing activities. 

Fourth Quarter 2015 Results Summary

Gross Bookings and Revenue

  • Gross bookings were \\$509 million for fourth quarter 2015, representing a sequential increase of \\$7 million, or 1%, and a year over year decrease of \\$78 million, or 13%.  Excluding the impact of changes in foreign exchange rates, gross bookings would have increased by approximately 3% sequentially, and would have decreased by approximately 8% year over year.
  • In fourth quarter 2015, 84% or \\$428 million of gross bookings were derived from our mobile audience. This represented a 3% sequential increase and a 7% year over year decrease in mobile gross bookings. Gross bookings from web platforms were \\$80 million in fourth quarter 2015, representing 8% sequential and 37% year over year decreases.
  • Gross bookings from games other than Candy Crush Saga2 were \\$302 million for fourth quarter 2015, in line with third quarter 2015, and representing a year over year decrease of \\$22 million, or 7%.
  • Revenue was \\$461 million for fourth quarter 2015, representing a sequential decrease of \\$19 million, or 4%, and a year over year decrease of \\$85 million, or 16%.
  • The increase in gross bookings from third quarter 2015 to fourth quarter 2015 was primarily driven by growth in Candy Crush Saga and our newer games.  The sequential decrease in revenue reflects the growth in gross bookings which was more than offset by an increase in deferred revenue for virtual item balances held by players.
  • The year over year decreases in both gross bookings and revenue were primarily due to lower gross bookings from our more mature games, in particular Candy Crush Saga, partially offset by increased gross bookings from our newer games, in particular Candy Crush Soda Saga.  Additionally, no new franchise games were launched in 2015, as compared to three franchise games launched in the prior year. New franchise games tend to offset declines in our more mature games. The decrease in revenue also reflects a higher sales tax related to the value added tax legislation in the European Union effective in 2015, and sales tax provision reductions in other jurisdictions in 2014. 

Profit

  • Profit was \\$91 million for fourth quarter 2015, representing a decrease of \\$52 million, or 36%, compared to third quarter 2015. The decrease was primarily due to change in deferred revenue and higher acquisition-related and income tax expenses, which were partially offset by higher adjusted EBITDA.
  • Fourth quarter 2015 profit decreased by \\$50 million, or 36%, compared to fourth quarter 2014.  The decrease was primarily due to lower adjusted EBITDA, a foreign exchange loss compared to a gain in the prior year period, and higher acquisition-related expenses, which were partially offset by lower income tax expense.

Adjusted EBITDA

  • Fourth quarter 2015 adjusted EBITDA was \\$188 million, representing an increase of \\$7 million, or 4%, compared to third quarter 2015.  The sequential increase was primarily due to higher gross bookings and lower sales and marketing expenses, which were partially offset by higher platform fees and research and development expenses. 
  • Compared to fourth quarter 2014, adjusted EBITDA decreased \\$49 million, or 21%.  The year over year decrease was primarily due to lower gross bookings and revenue and higher research and development and general and administrative expenses, which were partially offset by lower platform fees and sales and marketing expenses.

Cash and Cash Equivalents

  • Cash and cash equivalents were \\$1.1 billion at December 31, 2015, up \\$187 million since September 30, 2015.

Network Reach

  • MAUs were 449 million in fourth quarter 2015, down 25 million, or 5%, from third quarter 2015, and down 84 million, or 16%, from fourth quarter 2014.
  • DAUs were 128 million in fourth quarter 2015, down 5 million, or 4%, from third quarter 2015, and down 21 million, or 14%, from fourth quarter 2014.
  • The sequential and year over year decreases in MAUs and DAUs were due to decreased activity, primarily in Candy Crush Saga as well as in our other mature games, partially offset by increased activity in our newer games. The rate of decline was higher on web than mobile, which we believe is primarily due to newer mobile game launches that have not launched on web, and a continuing decline in Facebook desktop players.
  • MUUs were 318 million in fourth quarter 2015, down 12 million, or 4%, from third quarter 2015, and down 38 million, or 11%, from fourth quarter 2014.
  • The sequential decrease in MUUs was reflected in both web and mobile, but at a greater rate of decline on web, which we believe is primarily due to the fourth quarter mobile launch of a game which was not also launched on web, and a continuing decline of Facebook desktop players. 
  • The year over year decrease in MUUs was reflected in both web and mobile, but at a greater rate of decline on web, which we believe is primarily due a continuing decline of Facebook desktop players, and mobile game launches in the second half of 2015 that have not launched on web. 

Monetization

  • MUPs in fourth quarter 2015 were 6.6 million, down 264,000, or 4%, from third quarter 2015, and down 1.8 million, or 21%, from fourth quarter 2014.
  • The sequential decrease in MUPs reflects decreases in mobile and web.  MUPs declined at a slower rate than in third quarter 2015, which we believe reflects our efforts to improve engagement and monetization through continuous game optimization and ongoing deployment of live ops in our franchise games.
  • The year over year decrease in MUPs reflects decreases on mobile and web.  The decrease was primarily in our less engaged payers, which we define as payers who paid in only one game. Additionally, our transition to virtual currency in our mobile games through the end of 2014 contributed to the decline in MUPs as virtual currency reduces the frequency of transactions due to purchases of larger packages of virtual currency which are used over extended periods.
  • MGABPPU increased to \\$25.76 in fourth quarter 2015, up \\$1.31, or 5%, from third quarter 2015, and up \\$2.34, or 10%, from fourth quarter 2014.
  • The sequential and year over year increases in MGABPPU primarily reflect the impact of product optimizations introduced in our games, including live ops.

Activision Blizzard Transaction

On November 2, 2015 the Company announced that it had signed a definitive agreement to be acquired by Activision Blizzard, Inc., a global interactive entertainment company (the "Acquisition").  Under the terms of the agreement Activision Blizzard will purchase all outstanding and issued shares of King for \\$18 in cash per share, for a total equity value of approximately \\$5.9 billion.  The proposed transaction is being implemented by means of a scheme of arrangement under Irish law (the "Scheme"), and the resolutions required to approve the Scheme were passed by the requisite shareholder majorities at the Scheme meetings and the related extraordinary general meeting held on January 12, 2016.

The completion of the Acquisition remains subject to regulatory approvals and other customary closing conditions set out in the scheme circular related to the Acquisition, including the satisfaction of the EU Merger Regulation condition and sanction of the Scheme by the High Court of Ireland at the hearing to be held on February 18, 2016. The Scheme is expected to take effect in late February, subsequent to this hearing.

About King

King Digital Entertainment plc (NYSE: KING) is a leading interactive entertainment company for the mobile world. It had a network of 318 million monthly unique users as of fourth quarter 2015, has developed more than 200 exclusive games, and offers games in over 200 countries and regions through its king.com and royalgames.com websites, Facebook, and mobile distribution platforms such as the Apple App Store, Google Play Store and Amazon Appstore. King has game studios in Stockholm, Malm?, London, Barcelona, Berlin, Singapore, and Seattle, along with offices in San Francisco, Malta, Seoul, Tokyo, Shanghai and Bucharest.

Forward Looking Statements

All statements other than statements of historical fact contained in this release, including statements regarding the Activision Blizzard Acquisition are forward-looking statements. King has based these forward-looking statements on its estimates and assumptions as of the date of this release. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: uncertainties as to the timing of the Acquisition; uncertainties as to whether Activision Blizzard will be able to consummate the Acquisition; the possibility that competing offers will be made; the possibility that certain conditions to the consummation of the Acquisition will not be satisfied; the possibility that Activision Blizzard will be unable to obtain regulatory approvals for the Acquisition on a timely basis or at all, or be required, as a condition to obtaining regulatory approvals, to accept conditions that could reduce the anticipated benefits of the Acquisition; the possibility that shareholders will file lawsuits challenging the Acquisition, including actions seeking to rescind the Scheme or enjoin the consummation of the Acquisition; the ability to meet expectations regarding the accounting and tax treatments of the Acquisition; changes in relevant tax and other laws or regulations; the possibility that the Scheme may be terminated in circumstances that require King to reimburse certain expenses to Activision Blizzard or Activision Blizzard to pay a termination fee to King related to the Acquisition; and changes in the economic and financial conditions of the businesses of Activision Blizzard, King, or the combined company.

New risks emerge from time to time. It is not possible for King management to predict all risks, nor can King assess the impact of all factors on its business or the Activision Blizzard Acquisition or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that King may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. King does not undertake any obligation to update publicly or revise any forward-looking statements for any reason after the date of this release, nor to conform these statements to actual results, future events, or to changes in King's expectations.  

Non-GAAP and Other Financial Measures

King uses International Financial Reporting Standards ("IFRS"). In addition to IFRS financials, this release includes certain financial measures not based on IFRS, including gross bookings, adjusted revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted profit and adjusted EPS, as well as certain gross bookings information presented on a constant currency basis. These non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. The non-GAAP financial measures used by King may differ from the non-GAAP financial measures used by other companies, and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. Some limitations of the non-GAAP financial measures we use are listed below:

Gross Bookings: Gross bookings is a non-GAAP financial measure that is not calculated in accordance with IFRS. Gross bookings is the economic benefit collected from the sale of virtual items and for access to skill tournaments. The Company uses gross bookings to evaluate the results of operations, generate future operating plans and assess performance. While King believes that this non-GAAP financial measure provides a meaningful measurement of the business performance during a particular period because it measures the total cash spend by players in the period, this information should be considered as supplemental in nature and is not meant as a substitute for revenue recognized in accordance with IFRS. In addition, other companies, including companies within our industry, may calculate gross bookings differently or not at all, which reduces its usefulness as a direct comparative measure.

Adjusted Revenue: Adjusted revenue is a non-GAAP financial measure that is not calculated in accordance with IFRS. King defines adjusted revenue as revenue adjusted to include changes in deferred revenue. King believes that adjusted revenue is a useful metric for calculating adjusted EBITDA margin and understanding our operating results and ongoing profitability.

Adjusted EBITDA and Adjusted EBITDA Margin: Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that are not calculated in accordance with IFRS. King defines adjusted EBITDA as profit (loss), adjusted for income tax expense (credit), foreign currency exchange loss (gain), acquisition-related (benefit) expense (including acquisition-related contingent consideration fair value adjustments and other acquisition-related adjustments), non-operating (income) expense, net finance (income) costs, depreciation, amortization, share-based and other equity-related compensation (including social security charges associated therewith) and changes in deferred revenue. King defines adjusted EBITDA margin as adjusted EBITDA as a percentage of adjusted revenue. King believes that adjusted EBITDA and adjusted EBITDA margin are useful metrics for investors to understand and evaluate our operating results and ongoing profitability because they permit investors to evaluate our recurring profitability from our ongoing operating activities. King also uses these measures internally to establish forecasts, budgets and operational goals and to manage and monitor our business, as well as evaluating our ongoing and historical performance. Adjusted EBITDA and adjusted EBITDA margin have certain limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under IFRS. Other companies, including companies in our industry, may calculate adjusted EBITDA differently or not at all, limiting its usefulness as a direct comparative measure.

Capital Expenditures: King defines capital expenditures as the amount paid in the period for the purchase of property, plant and equipment, and intangible assets. King monitors capital expenditures as a measure of the amount we have invested in maintaining or growing the scope of our business. Other companies, including companies in our industry, may calculate capital expenditures differently or not at all, limiting its usefulness as a direct comparative measure.

Adjusted Profit: Adjusted profit is a non-GAAP financial measure that is not calculated in accordance with IFRS. King defines adjusted profit as profit (loss), adjusted for share-based and other equity-related compensation (including social security charges associated therewith), changes in deferred revenue, acquisition-related (benefit) expense (including acquisition-related contingent consideration fair value adjustments and other acquisition-related adjustments) and amortization of acquired intangible assets. Other companies, including companies in our industry, may calculate adjusted profit differently or not at all, limiting its usefulness as a direct comparative measure.

Adjusted EPS: Adjusted EPS is a non-GAAP financial measure that is not calculated in accordance with IFRS. King defines adjusted EPS as adjusted profit divided by the diluted weighted average number of ordinary shares in issue during the period.

Foreign Exchange Effect on Gross Bookings: Certain gross bookings information in this release is presented on a constant currency basis. This information was calculated using exchange rates consistent with those in effect for the comparative periods. We believe the constant currency measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. Investors should be cautioned that the effect of changing foreign currency exchange rates has an actual effect on operating results.

Reconciliations of these non-GAAP measures to the most directly comparable IFRS measure are included in the accompanying tables.

For definitions of key performance indicators including MAUs, DAUs, MUUs, MUPs and MGABPPU, and other financial measures including Movement in player wallet and other adjustments, please see "Key Operating Metrics" and "Non-GAAP Financial Measures" in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 6-K filed by the Company with the U.S. Securities and Exchange Commission on November 5, 2015.

Certain figures in the release may not recalculate exactly due to rounding. This is because percentages and/or figures contained herein are calculated based on actual numbers and not the rounded numbers presented.

 

 

KING DIGITAL ENTERTAINMENT PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)





Three Months Ended

December 31,



2015



2014


Revenue

\\$

460,736



\\$

545,617


Other income


2,264




9,163


Costs and expenses*:








Cost of revenue


151,445




174,774


Research and development


52,641




48,533


Sales and marketing


71,493




107,763


General and administrative


56,145




37,075


Total costs and expenses


331,724




368,145


Other gains


208




17,645


Net finance costs


(6)




(196)


Profit before tax


131,478




204,084


Income tax expense


40,811




63,467


Profit

\\$

90,667



\\$

140,617










Earnings per share attributable to the equity holders of the Company during the period:








    Basic earnings per share

\\$

0.29



\\$

0.45


    Diluted earnings per share

\\$

0.28



\\$

0.44










Weighted average number of shares used in computing earnings per share:








    Basic


312,721




315,207


    Diluted


320,822




322,203










_______________
















* Includes share-based and other equity-related compensation expense as follows:
















Cost of revenue

\\$

165



\\$

507


Research and development


7,406




11,623


Sales and marketing


2,235




2,042


General and administrative


11,360




12,927


          Total share-based and other equity-related compensation expense

\\$

21,166



\\$

27,099


KING DIGITAL ENTERTAINMENT PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)





Years Ended

December 31,



2015



2014


Revenue

\\$

1,999,490



\\$

2,260,241


Other income


13,079




9,163


Costs and expenses*:








Cost of revenue


636,295




716,743


Research and development


198,445




177,934


Sales and marketing


344,822




455,408


General and administrative


178,410




184,236


Total costs and expenses


1,357,972




1,534,321


Other gains


21,859




34,100


Net finance costs


(667)




(905)


Profit before tax


675,789




768,278


Income tax expense


159,010




193,427


Profit

\\$

516,779



\\$

574,851










Earnings per share attributable to the equity holders of the Company during the year:








    Basic earnings per share

\\$

1.65



\\$

1.86


    Diluted earnings per share

\\$

1.62



\\$

1.79










Weighted average number of shares used in computing earnings per share:








    Basic


312,428




309,120


    Diluted


319,438




320,301










_______________
















* Includes share-based and other equity-related compensation expense as follows:
















Cost of revenue

\\$

1,254



\\$

5,709


Research and development


39,912




63,992


Sales and marketing


10,925




11,712


General and administrative


47,780




85,876


          Total share-based and other equity-related compensation expense

\\$

99,871



\\$

167,289


 

KING DIGITAL ENTERTAINMENT PLC

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands)

(unaudited)






Years Ended





December 31,





2015



2014












 Assets










 Current assets










 Cash and cash equivalents



\\$

1,107,386



\\$

963,972


 Trade and other receivables




157,880




228,392


 Income tax receivable




39,654




103,748


 Total current assets




1,304,920




1,296,112


 Non current assets










 Intangible assets, net




104,744




48,587


 Property, plant and equipment, net




56,541




34,310


 Deferred tax assets




30,745




14,733


 Income tax receivable




34,598




38,431


 Other deposits




2,599




9,604


 Total non current assets




229,227




145,665


 Total assets



\\$

1,534,147



\\$

1,441,777


 Liabilities and shareholders' equity










 Current liabilities










 Trade and other payables




101,323




137,638


 Deferred revenue




56,274




34,310


 Income tax liabilities




167,570




232,637


 Provision for other liabilities




4,017




-


 Total current liabilities




329,184




404,585


 Non current liabilities










 Deferred tax liabilities




3,634




669


 Income tax liabilities




52,136




51,589


 Provision for other liabilities




9,673




3,055


 Other non current liabilities




4,356




13,000


 Total non current liabilities




69,799




68,313


 Total liabilities



\\$

398,983



\\$

472,898


 Shareholders' equity










 Share capital




77




78


 Other reserves




404,181




456,499


 Retained earnings




730,906




512,302


 Total shareholders' equity




1,135,164




968,879


 Total liabilities and shareholders' equity



\\$

1,534,147



\\$

1,441,777


 

KING DIGITAL ENTERTAINMENT PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)





Years Ended

December 31,



2015



2014


 Cash flows from operating activities








 Profit for year

\\$

516,779



\\$

574,851


 Adjustments to reconcile profit to net cash provided by operating activities:








 Depreciation and amortization


27,359




14,845


 Equity settled share-based payments


83,345




116,877


 Unrealized foreign currency exchange gain


(7,752)




(32,835)


 Loss on disposal of property, plant and equipment & intangible assets & derecognition of intangible assets


3,486




1,055


 Impairment charge


2,875




-


 Net finance costs


667




905


 Income tax expense


159,010




193,427


 Change in fair value of contingent consideration


(20,000)




(4,000)


 Change in deferred revenue


21,964




23,368


 Change in provisions


10,635




(15,513)


 Changes in operating assets and liabilities:








 Trade receivables


78,141




4,020


 Prepayments, other receivables, current and non current assets


(3,974)




(15,505)


 Trade payables


(14,740)




(5,488)


 Accrued expenses and other liabilities


(16,058)




(44,130)


 Cash generated from operations


841,737




811,877


 Interest received


278




275


 Finance costs paid


(783)




(1,020)


 Income tax paid, net of refunds


(165,051)




(149,847)


 Net cash provided by operating activities


676,181




661,285


 Cash flows from investing activities








 Purchases of intangible assets


(13,589)




(9,729)


 Purchase of property, plant and equipment


(47,996)




(31,274)


 Purchase of business, net of cash acquired


(44,574)




(17,969)


 Net cash used in investing activities


(106,159)




(58,972)


 Cash flows from financing activities








 Payment of dividends


(298,175)




(363,876)


 Proceeds from initial public offering


-




329,404


 Repurchase of the company's share capital


(125,729)




(1,240)


 Proceeds from exercise of share options and employee share plan


5,725




3,062


 Net cash used in financing activities


(418,179)




(32,650)


 Net increase in cash and cash equivalents


151,843




569,663


 Cash and cash equivalents at the beginning of the year


963,972




408,695


 Exchange losses on cash and cash equivalents


(8,429)




(14,386)


 Cash and cash equivalents at the end of the year

\\$

1,107,386



\\$

963,972


Reconciliations of Non-GAAP Results to Nearest GAAP Measures

(in thousands, except per share amounts)

(unaudited)





Years Ended



December 31,



2015


2014


Reconciliation of Revenue to Gross Bookings:







Revenue

\\$

1,999,490


\\$

2,260,241


Sales tax


124,539



101,665


Other revenue


(5,814)



(8,648)


Movement in player wallet and other adjustments


4,683



5,755


Change in deferred revenue


21,964



23,368


Gross bookings

\\$

2,144,862


\\$

2,382,381
















Reconciliation of Revenue to Adjusted Revenue:







Revenue

\\$

1,999,490


\\$

2,260,241


Change in deferred revenue


21,964



23,368


Adjusted revenue

\\$

2,021,454


\\$

2,283,609
















Reconciliation of Profit to Adjusted EBITDA:







Profit

\\$

516,779


\\$

574,851


Add:







Income tax expense


159,010



193,427


Foreign currency exchange gain


(1,859)



(29,100)


Acquisition-related expense


2,001



4,248


Non-operating (income) expense


(11)



413


Net finance costs


667



905


Share-based and other equity-related compensation


99,871



167,289


Change in deferred revenue


21,964



23,368


Depreciation and amortization


27,359



14,845


Adjusted EBITDA

\\$

825,781


\\$

950,246


Adjusted EBITDA margin

41%


42%
















Reconciliation of Profit to Adjusted Profit:







Profit

\\$

516,779


\\$

574,851


Add:







Share-based and other equity-related compensation


99,871



167,289


Acquisition-related expense


2,001



4,248


Change in deferred revenue


21,964



23,368


Amortization of acquired intangible assets


2,535



745


Tax effect of adjustments


(25,938)



(32,744)


Adjusted profit

\\$

617,212


\\$

737,757
















Reconciliation of Adjusted EPS:







Adjusted profit

\\$

617,212


\\$

737,757


Diluted weighted average number of ordinary shares


319,438



320,301


Adjusted EPS

\\$

1.93


\\$

2.30


Reconciliations of Non-GAAP Results to Nearest GAAP Measures

(in thousands, except per share amounts)

(unaudited)





Three Months Ended

December 31,



2015


2014


Reconciliation of Revenue to Gross Bookings:







Revenue

\\$

460,736


\\$

545,617


Sales tax


30,350



27,406


Other revenue


(1,094)



(1,820)


Movement in player wallet and other adjustments


1,125



1,496


Change in deferred revenue


17,657



13,583


Gross bookings

\\$

508,774


\\$

586,282
















Reconciliation of Revenue to Adjusted Revenue:







Revenue

\\$

460,736


\\$

545,617


Change in deferred revenue


17,657



13,583


Adjusted revenue

\\$

478,393


\\$

559,200
















Reconciliation of Profit to Adjusted EBITDA:







Profit

\\$

90,667


\\$

140,617


Add:







Income tax expense


40,811



63,467


Foreign currency exchange loss (gain)


792



(15,145)


Acquisition-related expense


8,718



464


Non-operating income


1



1,510


Net finance costs


7



196


Share-based and other equity-related compensation


21,166



27,099


Change in deferred revenue


17,657



13,583


Depreciation and amortization


8,031



5,553


Adjusted EBITDA

\\$

187,850


\\$

237,344


Adjusted EBITDA margin

39%


42%
















Reconciliation of Profit to Adjusted Profit:







Profit

\\$

90,667


\\$

140,617


Add:







Share-based and other equity-related compensation


21,166



27,099


Acquisition-related expense


8,718



464


Change in deferred revenue


17,657



13,583


Amortization of acquired intangible assets


703



461


Tax effect of adjustments


(15,432)



1,960


Adjusted profit

\\$

123,479


\\$

184,184
















Reconciliation of Adjusted EPS:







Adjusted profit

\\$

123,479


\\$

184,184


Diluted weighted average number of ordinary shares


320,822



322,203


Adjusted EPS

\\$

0.38


\\$

0.57


Reconciliations of Non-GAAP Results to Nearest GAAP Measures

(in thousands)

(unaudited)





Three Months Ended



September 30,



2015


Reconciliation of Revenue to Gross Bookings:




Revenue

\\$

479,709


Sales tax


29,259


Other revenue


(1,485)


Movement in player wallet and other adjustments


975


Change in deferred revenue


(6,314)


Gross bookings

\\$

502,144














Reconciliation of Profit to Adjusted EBITDA:




Profit

\\$

142,684


Add:




Income tax expense


31,166


Foreign currency exchange gain


(1,614)


Acquisition-related benefit


(12,537)


Non-operating income


-


Net finance costs


272


Share-based and other equity-related compensation


19,458


Change in deferred revenue


(6,314)


Depreciation and amortization


7,266


Adjusted EBITDA

\\$

180,381


Adjusted EBITDA margin


38%


 

Reconciliations of Non-GAAP Results to Nearest GAAP Measures

(in thousands)

(unaudited)


Foreign Exchange Effect on Gross Bookings:









Three Months Ended


Sequential

December 31,
2015



September 30,
2015


Reported gross bookings

\\$

508,774



\\$

502,144


   Foreign exchange effect on Q4-15 gross bookings using Q3-15 rates


7,884






Gross bookings excluding foreign exchange effect

\\$

516,658






Reported gross bookings sequential change %

1%






Gross bookings excluding foreign exchange effect sequential change %

3%














Year over Year

Three Months Ended

December 31,



2015



2014


Reported gross bookings

\\$

508,774



\\$

586,282


   Foreign exchange effect on Q4-15 gross bookings using Q4-14 rates


32,282






Gross bookings excluding foreign exchange effect

\\$

541,056






Reported gross bookings year over year change %

(13%)






Gross bookings excluding foreign exchange effect year over year change %

(8%)














Year over Year

Years Ended

December 31,



2015



2014


Reported gross bookings

\\$

2,144,862



\\$

2,382,381


   Foreign exchange effect on full year 2015 gross bookings using 2015 rates


160,800






Gross bookings excluding foreign exchange effect

\\$

2,305,662






Reported gross bookings year over year change %

(10%)






Gross bookings excluding foreign exchange effect year over year change %

(3%)






1 According to

App Annie.
2 "Gross bookings from games other than Candy Crush Saga" represents total gross bookings (including Candy Crush Soda Saga) less gross bookings from Candy Crush Saga.